BlackBerry: Short the Rallies $BBRY

If only it were as simple as changing your name...

In case you missed it Research in Motion (Nasdaq: RIMM), the Canadian maker of the iconic BlackBerry smartphone changed its name earlier this week to BlackBerry and its ticker symbol to BBRY.

The name change coincided with the launching of the BlackBerry 10 operating system in what amounts to a do-or-die move for the company. A skeptical Wall Street responded by sending the share price plummeting.

Why the rebranding? It was ostensibly done to energize the company's employees, who have no doubt felt the effects of BlackBerry's woes in recent years. But more than anything, it was a way for CEO Thorsten Heins to stamp his name on the company and shed the baggage of the companies founders who had run it into the ground.

None of this will matter. BlackBerry is no more a different company than Altria (NYSE:MO) was when it ditched the name Philip Morris.

In the end, the BlackBerry 10 devices must be a smash hit, or the company will continue to slide into irrelevance. I hate to make the company and the stock all about one product, but that is the reality here. Yes, BlackBerry has large subscription revenues. But those revenues require users. BlackBerry is a software and services company only to the extent that it has hardware users to sell them to.

By all accounts, the BB10 devices appear to be nice phones with virtually all the features of an iPhone or Android device (and even a few new unique ones). But while the company was taking its time rolling out the product, Apple (Nasdaq:AAPL), Google (Nasdaq:GOOG) and Microsoft (Nasdaq:MSFT) all made significant inroads into the BlackBerry's core enterprise market. (Apple's emergence in enterprise was only made possible by BlackBerry's incompetence, by the way. If BlackBerry hadn't let Apple jump so far ahead of it in user appeal, they could have kept their virtual monopoly intact.)

What's more, the BlackBerry network simply isn't worth what it used to be. The week-long service outage in 2011 was a turning point for many (including myself). And carriers are pushing back on the fees they have to pay to support BIS/BES. BlackBerry has been somewhat quiet about the full extent, but if you are an AT&T or a Verizon, why would you continue to pay BlackBerry's network costs when competing devices don't require it? And adding insult to injury, in the consumer market, there is no BIS push email.

BlackBerry MIGHT have a chance of salvaging its enterprise business (though I consider this to be doubtful). But I do not see it getting the attention of consumers. It's too little, too late, and the brand is simply too tarnished.

Action to take: Short the RIMM/BBRY rallies. Be careful here, because this is a volatile stock. It was up 3% in premarket trading as I was putting the finishing touches on this article.

But over the course of the next several weeks, I see this stock drifting well below $10. As always, use a stop loss for protection. I would recommend something along the lines of a 7-10% stop.

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