BBRY's Make-or-Break Quarter Was a Bust

 | Jun 28, 2013 | 2:08 PM EDT
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It's hard to imagine how BlackBerry (BBRY) could have had a worse quarter this morning. It was bafflingly bad.

What made it so bad?

Subscribers dropped 5 million to 72 million. It announced it would no longer report subscriber numbers.

It missed badly on its previously-lowered revenue and EPS numbers.

It sold 2.7 million BB10 phones, which was only up from 1 million in the prior quarter.

Services revenue dropped from the mid-$900 million level of the last quarter to the high $700 million range due to currency challenges in Venezuela. The company advised analysts to expect continued mid-single-digit sequential drops from those newly-lowered levels.

Gross margins fell to 33% from 35%. But what was worse was that the new BB10 phones seemed to do nothing to help the margins. It was assumed these phones were highly profitable.

But worse than all this were the tones of the CEO and CFO tone during the call. They seemed oblivious to all the problems laid out in the results. It was maddening to listen to.

"We are just at the start of this new platform."

"I had different expectations than the analysts."

"We continue to believe in the decisions we made."

There is really no hope left for BlackBerry after these results. It had hoped it could be a No. 3 platform player in the world. Those dreams seem impossible now.

Its greatest hope is that someone buys them, and someone probably will.

There is still patent value at BlackBerry. There is also the new QNX-based platform. Cisco (CSCO) or Hewlett-Packard (HPQ) could be interested.

But do you want to stick around and wait? It's hard to have any confidence in Thorsten Heins after today's results. 

I used to think Heins was a terrible communicator, but a good executor. Now we know he's bad at both.

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