BlackBerry Ltd (NASDAQ:BBRY) and Apple Inc. (NASDAQ:AAPL) stocks are trading in the lower zone for quite some time now, and both stocks have declined around 20 percent in a year compared to S&P 500 (INDEXSP:.INX), which is up by 10 percent. However, Apple Inc. (NASDAQ:AAPL) is in a much better position to rebound from the current levels compared to Blackberry Ltd (NASDAQ:BBRY), says a report from TheStreet by Bret Kenwell.
Case against BlackBerry
BlackBerry Ltd (NASDAQ:BBRY) posted dismal first quarter earnings after which the market value of the company was slashed by one third. Those who were bullish on the stock hold the view that BlackBerry has a “large” cash balance of around $3 billion and no debt. But when sales are declining then these metrics hardly matter. Sales of BlackBerry phones declined 15 percent from the previous quarter, and the company’s Z10 price was reduced by many retailers shortly after it was launched.
Why is Apple better?
Apple Inc. (NASDAQ:AAPL) has been posting huge profits and the iPhone raked in massive sales in the previous quarter, which was better than analyst expectations. Some hold doubts about Tim Cook’s abilities, however he has clear strategies from the operational point of view.
It is not practical for any company, even for Apple Inc. (NASDAQ:AAPL), to come out with a breakthrough innovation every year, as investors and the world seem to expect. However, from October and over the next 15 months, the company is going to launch a series of new products and it would be worth waiting to see the reaction then.
Apple Inc. (NASDAQ:AAPL) is seeing a surge in its ecosystem with a number of current iOS devices at present expected to increase from 346.5 million in 2012 to over 570 million by 2017. An increase of 65 percent is way better than the 30 percent decline expected for BlackBerry in the same period.
The Cupertino-based firm is cash rich with $146 billion stacked. Apple Inc. (NASDAQ:AAPL) is using this cash to repurchase stock worth $60 billion and pay out quarterly dividend at $3.05 per share. Even after this, Apple Inc. (NASDAQ:AAPL) has a huge amount to spend on acquisitions and research.
The market for smartphones is jam packed with leaders such as Google Inc (NASDAQ:GOOG), Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) and Apple Inc. (NASDAQ:AAPL). BlackBerry Ltd (NASDAQ:BBRY) and Microsoft Corporation (NASDAQ:MSFT) are, however, struggling and hold a little share of the pie.
BlackBerry Ltd (NASDAQ:BBRY) proves to be a riskier investment with low earnings, product flops and price reductions. Apple Inc. (NASDAQ:AAPL), on the other hand, is in a much better position to invest in popular products, and has a queue of eagerly awaited new product lines that will be unveiled over the next 18 months.
Apple Inc. (NASDAQ:AAPL) has been facing challenges over the past couple of quarters but between the two stocks, Apple Inc. (NASDAQ:AAPL) can definitely be preferred.