BlackBerry Gives Up, Investors Rejoice

Rumors of BlackBerry's demise started circulating last Friday. Several news outlets' anonymous sources said that the smartphone designer might put itself on the auction block. The rumors were confirmed on Monday, when the Canadian company's board of directors announced exactly that kind of endgame strategy.

And investors love this capitulation. BlackBerry shares jumped more than 13% higher in two trading days.

BBRY Chart
BBRY Chart

BBRY data by YCharts.

Seeking a buyout may indeed be the best way forward for the troubled device designer.

BlackBerry tried and failed to pull itself up by the BB10 platform's bootstraps. An organic return to healthy growth seems unlikely, given the runaway dominance of Apple and Google in the mobile market. The rich get richer, the upstarts and the has-beens get nothing at all. And BlackBerry has been talking about alternative plays such as licensing its secure communications technologies to other companies -- but that's hardly enough to support a $5 billion market cap.

You could argue that there's room for a third powerhouse in the mobile market. Consumers will eventually tire of the Android-iPhone duopoly and look for something fresher. That trend break may already have started.

But even so, consumers aren't likely to turn their attention to old-school brands like BlackBerry. The Canadians had a go at smartphone dominance in the CrackBerry era, wedged between two-way pagers and true smartphones. Now it's an old and tired brand, more of an albatross than a selling point. It doesn't really matter anymore if the next BlackBerry handset or software update might blow the incumbents out of the water. Some downtrends are just too hard to break.

CEO Thorsten Heins, who serves on the newly formed special committee of BlackBerry's board, is keeping a stiff upper lip. "We continue to see compelling long-term opportunities for BlackBerry 10," he said in a statement. "We are pleased with the progress that has been made in our transition."

Then again, the company cannot promise a final sale, or indeed any other agreeable ending to this painful story. I would be shocked to see any of the current major players in the mobile market picking up this dwindling asset bundle at any price. The company is more likely to be chopped up and sold for parts. In a year or two, BlackBerry might become a decent-sized app developer with a unique history, the handset division long forgotten and BB10 going open-source just to stay alive.

Shareholders would be wise to take their short-term profits or long-term damage control gains here, because the final tally may still have further to fall. My bearish CAPScall on this stock stays in place until further notice.

BlackBerry's swan song proves that nobody is too big to fail in this brutal industry. Want to get in on the smartphone phenomenon without risking it all on a single platform? Truth be told, one company sits at the crossroads of smartphone technology as we know it. It's not your typical household name, either. In fact, you've probably never even heard of it! But it stands to reap massive profits NO MATTER WHO ultimately wins the smartphone war. To find out what it is, click here to access the "One Stock You Must Buy Before the iPhone-Android War Escalates Any Further..."

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