BlackBerry’s Android Woes Could Force It To Exit Handset Business. How Would It Impact The Stock?

June 9th, 2016 by Trefis Team

BlackBerry’s (NASDAQ:BBRY) bet on Android appears to be facing significant challenges, with a representative of AT&T – one of the company’s most important carrier partners – indicating that sales of BlackBerry’s flagship Android device, the Priv, were “really struggling”, while also noting that the handset has seen a significant return rate. [1] Although it’s been evident that BlackBerry’s handset business is facing headwinds (shipments fell by about 55% year over year to just 600k units during Q4 FY’16), the company hasn’t provided much detail about the performance of its Android bet. However, the comments from AT&T provide the clearest indicator yet that the Android strategy – which was viewed as a last stand of sorts for BlackBerry’s hardware business – could be failing. BlackBerry CEO John Chen had previously indicated that the carrier might exit the handset business if it fails to sell at least 5 million phones in 2016, and it appears increasingly likely that this could happen. Below we take a look at the possible impact on BlackBerry’s stock if the company were to exit the handset business.

BBRY_Excl_handset_

 ^: PP&E stood at $412m as of Q4’16. Estimating that handsets account for two-thirds of this

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Notes:
  1. BlackBerry Priv is faring worse than expected, CNET, June 2016 [↩]