FR: Service Restored, but at What Cost?

Article: Service Restored, but at What Cost?

The next “Fool Revisited” piece this week was inspired by a BlackBerry Limited (NYSE: BB) network outage. Remember that was a thing that mattered? Back when BlackBerry was called Research in Motion and they were considered the best at cell phone and security tech. It was truly an interesting time in our relatively recent history. At the time of article publication, BlackBerry was in third place among the use of mobile networks. Third place!! How times have changed. BlackBerry now gets lumped in with “Other” when discussing its mobile market share. Ouch!

I once owned a BlackBerry phone. I dropped the Android phone I had at the time and I needed a replacement. I didn’t want to get an iPhone, and it was too early in my personal replacement cycle to get another Android device for a reasonable price. Enter my BlackBerry Z10 that I had high hopes for, but I should have known I was going to be disappointed when I was able to get a refurbished version for less than $50. Let’s just say it didn’t go well – primarily because of a lack of apps and other fun things I had gotten used to – and it wasn’t long before I was back on an Android device.

There was a time before iPhone that Blackberry phones were really the way to go. But the iPhone’s launch in 2007 really was the beginning of the end for the BlackBerry as the smart phone of choice for most users, and the stock’s performance from article publication – which was four years after the iPhone – illustrates this. Using the compound annual growth rate (CAGR) and total since article publication on October 18, 2011 to February 9, 2018, it really should be a no brainer that Apple (Nasdaq: AAPL) would dominate a company that was once considered nearly on par in the smartphone realm:

Stock Start Price End Price CAGR Total Growth Value of $10,000
BlackBerry $23.21 $11.61 -10.38% -49.98% $5,002
Apple $40.83 $156.41 23.69% 283.08% $38,308
S&P 500 $1,225.38 $2,619.55 12.78% 113.77% $21,377

Source: Yahoo! Finance & author calculation; Stock prices include dividends & stock splits

Though the publication of my article back in 2011 wasn’t exactly the turning point for both stocks, we can see that while BlackBerry has lost nearly half its value since then, Apple has nearly quadrupled in value and may be well on its way to being the first company with a trillion dollar market cap (its currently at $835 billion!). Meanwhile, BlackBerry, both as a device and a company, still has some devoted followers, but it is nowhere near its once lofty perch as Canada’s most valuable company. I personally think that Apple is a pretty solid investment right now, if only for its large cash position and potential to boost its dividend using that cash, but its days as a pure growth play may be behind it unless it can truly start innovating again.

Until next time…

Disclaimer: I do not own currently own shares in any of the mentioned companies, and I have no plans to purchase shares of either company within the next 60 days in any account in which I manage investment funds. You can read a little about my personal investment philosophy here.

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