Research in Motion Ltd BBRY

BlackBerry was once a high-flying smartphone maker, but we believe an inability to sustain its technological advantages and develop adequate switching costs around its BlackBerry handsets has led to the firm's recent demise. We see virtually no scenario where BlackBerry will re-emerge as a smartphone industry titan; the question remains whether the company can develop a sustainable business as a leaner, meaner firm. Ultimately, we currently view an investment in BlackBerry as a lottery ticket; if the firm can gain meaningful traction in the smartphone market with its BlackBerry 10 operating system and continue to earn high-margin services revenue from both BB10 and older BB7 users, its shares could be wildly undervalued today. However, we continue to have little faith that this scenario will play out; instead, we foresee the company emerging as a niche player that manages to barely break even over the next few years.