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T-Mobile U.S. Stops BlackBerry Retail

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The sufferings of BlackBerry Limited continues with T-Mobile U.S. Inc. (TMUS - Free Report) , one of the big four U.S. telecom carriers, deciding to stop stocking BlackBerry smartphones in its stores. The news came a couple of days after the Canadian handset manufacturer agreed to divest its entire stake to Toronto-based insurance company Fairfax Financial Holdings Ltd. for $4.7 billion, or $9 per share.   

T-Mobile U.S. announced that it will continue to endorse BlackBerry devices and take customer orders at its retail stores. However, the smartphones will be shipped directly to customers instead of giving them an option to handpick them at its stores. T-Mobile U.S. will continue to sell BlackBerry smartphones online.

Shareholders of BlackBerry reacted negatively since the news came out as the stock lost 6.8% of its value on Nasdaq. T-Mobile U.S. on the contrary had a better outing on the bourse as its stock price gained 2.68% since Wednesday.

T-Mobile’s decision does not come as surprise as BlackBerry reported dismal preliminary results for the second quarter of fiscal 2014. For the third quarter, BlackBerry expects to report a GAAP net loss of nearly $950 million to $995 million or around $1.81 to $1.90 per share along with a 45% annualized decline in revenue.  

BlackBerry, which is known for its secured email service continues to lose market share in a crowded smartphone market dominated by Apple Inc.’s (AAPL - Free Report) iPhone and Google Inc.’s Android-based devices. This quarter hasn’t been any expectation as the company is expected to report smartphone sales of 3.7 million, down 50% year over year.

Unlike T-Mobile, two of its bigger rivals AT&T Inc. and Verizon Wireless have decided to sell BlackBerry devices from their retail outlets. It is believed that AT&T and Verizon Wireless could follow the path of T-Mobile if the beleaguered handset manufacturer fails to improve its performance.

Losing T-Mobile is apparently just another of the many setbacks that BlackBerry is currently facing. But we believe that losing a carrier partner like T-Mobile is a grave concern as it will eventually impact its sales, given its expanded network.

Currently, T-Mobile U.S. carries a Zacks Rank #3 (Hold).

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