BlackBerry ditches consumer market, turns to corporate roots

In a last resort move to save business, BlackBerry has took steps to retreat from consumer market in favor of its traditional strength – serving businesses and governments. Analysts suggest the move will only speed up the downfall of the company.

“Perception is nine tenths of reality and if customer and supplier confidence continues to fall it doesnt matter how much cash they have on the balance sheet. Things could get worse,” said GMP Securities analyst Deepak Kaushal.

The Canadian-based company said last week that it’s cutting 4,500 jobs and taking a write-down of as much as $960 million for unsold inventory of its Z10 phone, touch-screen device unveiled in January as its answer to the iPhone.

In response to queries about its future sales strategy BlackBerry said on Sunday it would provide more detail when it announces quarterly earnings on September 27. On Friday, Chief Executive Thorsten Heins said the strategic shift to focus on enterprise customers would play to the companys strengths in security and reliability.

“Security matters and enterprises know the gold standard in enterprise mobility is BlackBerry,” he said in a statement.

Blackberry still has a substantial subscriber base of 72 million users globally at the end of June, though that did decline from 76 million three months earlier.

The shares tumbled 17% to $8.73 after the Sept. 20 announcement, dragging the company’s market value down to $4.6 billion. The stock has fallen 94% from its 2008 high. BlackBerry, credited with inventing the first smartphones more than a decade ago, once sold products that were so popular and addictive they were known as “CrackBerrys”. In recent years, the company failed to keep pace with Apple Inc. and Samsung Electronics Co., which offered better Web browsing and a wider range of applications. BlackBerry’s share of the global smartphone market shrank to 2.9% in the second quarter from 4.9% a year earlier, according to IDC.

Brian Blair, an analyst at Wedge Partners in New York, agrees there is some value in BlackBerry’s patent portfolio and its pool of subscribers but the company will fetch $7 or $8 a share at best, less than the stock’s current value.

“Sales have hit a wall and this is only going to get worse,” he said.