Blackberry shares take a second-quarter beating

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Blackberry shares take a second-quarter beating

BlackBerry’s shares tumbled the most since 2000 after the company reported a surprise loss and weak sales of a new touch-screen model, underscoring its challenges in competing directly with the iPhone and Android devices.

The company shipped 6.8 million smartphones last quarter, including about 2.7 million new BlackBerry 10 models - primarily its flagship Z10 touch-screen phone. Analysts had estimated total shipments of 7.5 million, with about 3.6 million BlackBerry 10 units. The Waterloo, Ontario-based company also blamed Venezuela’s currency controls for a portion of its quarterly loss because they hurt Latin American revenue.

BlackBerry is struggling to expand beyond keyboard phones, which are still popular among some lawyers and professionals but not as sought-after as Apple’s iPhone or smartphones based on Google’s Android. Yesterday’s stock tumble more than wiped out its gains for the year, signaling that investors may have been too optimistic about BlackBerry’s ability to wage a comeback fight against touch-screen rivals.

“The company now is a niche player for the declining segment that clings to a physical keyboard,” said Erik Gordon, a University of Michigan business professor.

BlackBerry shares plunged 28 percent to $10.46. It was the biggest decline since April 12, 2000, when stocks were crashing after the dot-com bubble burst. The fall more than erased a gain this year of 22 percent before yesterday.

BlackBerry’s loss last quarter was 13 cents a share, excluding some items, BlackBerry said in a statement. Analysts had estimated a profit of 8 cents on average, according to data compiled by Bloomberg. It reported sales of $3.07 billion for the period, which ended June 1, falling short of the $3.37 billion predicted by analysts.

“They missed on units, gross margin, earnings,” said Kevin Stadtler, president of Fort Worth, Texas-based Stadtler Capital Management, which owns about 45,000 BlackBerry shares. “It’s been a disappointing launch so far.”

BlackBerry’s flagship Z10 model was introduced in the U.K. in late January before being rolled out in the following weeks in Europe and the United States. The Q10, which has a physical keyboard, was introduced in April in some markets, though not in the United States until June. The model is meant to appeal to BlackBerry loyalists who prize the company’s qwerty keypads.

“A full quarter of BlackBerry 10 sell-in should’ve resulted in better results,” said Mark Sue, an analyst at RBC Capital Markets who has the equivalent of a hold rating on BlackBerry shares.

BlackBerry also faces price pressure in regions such as Latin America and South Asia, where low-cost Asian manufacturers are flooding the market with devices that run on Android.

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