Earlier today Wall Street firm Citigroup published a “sell’ recommendation and $4 target on shares of BlackBerry. The change of opinion happened because Citi has put another analyst in charge of covering the stock.  For years Jim Suva was the guy in charge of writing BlackBerry research. But in October Citi hired Ehud Gelblum (formerly Morgan Stanley, JP Morgan, etc) and today Gelblum took over coverage of BlackBerry.  Suva, apparently, is sticking to IT supply chain firms and IT hardware, according to Barrons.

What’s the main argument? Gelblum thinks the prospects of BlackBerry as a stand-alone company are weak. He thinks it would be worth more in a break-up scenario, but doesn’t think the board of directors would actually pull the trigger on this option.  Given John Chen’s statements about “taking down the for sale sign” I’m inclined to agree with Gelblum about the forward direction the board has voted on.

I haven’t read his entire report, but the segments quoted over at Barons seem to highlight Gelblum’s believe that BB10 does not have a meaningful future. He sees it as too distant of a player compared to Android, iOS or even Windows Phone, which has won 3rd place so far in this race. 

Where could he go wrong with his Sell rating?  It comes down to BBM and BES. Both of these are now cross-platform plays and therefore don’t depend on the success of BB10 to make money for the company going forward.

It comes down to BBM and BES. Both of these are now cross-platform plays and therefore don’t depend on the success of BB10 to make money for the company going forward

Personally, I think he’s right in his assessment that, today, BB10 is not a bet that has worked out. As great of an OS as it is, sales of the devices have fallen way short of what would be required to sustain the company in this game.  BBM and BES are the company’s best bets going forward, and I’m still not feeling too sure about either one at this point.

On BBM I’m willing to wait to see what happens over the next few weeks.  I’m hopeful that we’ll see some upgrades.  But the company has been radio silent on the PR front, in terms of any meaningful numbers. We need to see BBM thumping its chest every time it crosses some important milestone.  They need to keep the interest high, or it will be tough to pass WhatsApp.

With BES I’m just not sure what’s happening. I’m hoping this month’s quarterly conference call sheds some light on the situation.  My fear is that BlackBerry has almost no enterprise sales force left. They shifted so hard over to the consumer market over the last few years that I’m pretty sure they are in rough shape all around when it comes to the sales force.  If they want to be a serious player in enterprise they need a serious sales force.  If anyone has data points to share on this topic, I’m listening.

It is the Christmas season, so to leave this post with a bit more of a festive feeling, I’ll remind you all that BlackBerry only needs to get to a place where it can consistently bring in earnings of $250 million per year to see upside on the stock.  A stable business generating that kind of profit should be worth closer to $5 billion versus the market capitalization of only $3 billion today.  Not that a few bucks of upside in BlackBerry stock are going to make up for the massive value destruction we’ve seen in the last few years, but expectations are practically zero right now and the company has 2 solid irons in the fire with BBM and BES.