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Don’t Invest in Blackberry: Brian Sozzi

Daily Ticker

Blackberry surprised investors this morning by reporting a fourth quarter profit and increased demand in its new Z10 smartphone.

Blackberry’s $98 million net profit comes on the heels of a $1 billion cost-cutting program and the layoff of 5,000 employees led by Chief Executive Thorsten Heins. Heins also increased Blackberry’s advertising budget by 50% and launched an aggressive global campaign promoting the new Blackberry 10.

Blackberry founder Mark Lazaridis took this opportunity to announce his retirement stating, “With the launch of BlackBerry 10, I believe I have fulfilled my commitment to the board. Thorsten and his team did an excellent job in completing BlackBerry 10. We have a great deal of which to be proud. I believe I am leaving the company in good hands.”

But the good news may not be enough to save Blackberry. In spite of a positive net profit, the company’s fourth quarter revenue is down 36% year-over-year and its subscriber base has decreased by 3 million to 76 million users last quarter.

“People are finally throwing in the towel with Blackberry," says Brian Sozzi, Chief Equities Analyst at NBG Productions. “[People] don’t want the lousy browser on the Blackberry.”

Sozzi explains that Blackberry lost its user base to phones like Samsung’s Galaxy and Apple’s iPhone because of their better web and application capabilities. “So you’ve got Blackberry increasing their marketing,” he says. “But they still can’t get the customer back because they’ve locked into two-year contracts.”

Blackberry (BBRY) began the day at a loss and has since improved. But don’t read too heavily into stock price, says Sozzi. Blackberry is a small cap stock and is essentially a vehicle for big institutional traders. “Blackberry is a small-cap stock, you can push things around, you can mess around with the shorts and that’s what is happening,” he explains to The Daily Ticker’s Aaron Task.

A true believer in a Blackberry comeback may have trouble investing in the company because of its wild intraday swings, and they shouldn’t bother says Sozzi. “I don’t think you should have any involvement in this Blackberry story, because if you can’t follow it day-to-day you shouldn’t have any exposure to it.” Blackberry is a niche player that is losing subscribers and services daily, he concludes.

Instead look to EBay (EBAY) and Google (GOOG) for quality investments, suggests Sozzi.

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