Today’s news that Blackberry, the smartphone maker, is exploring “strategic alternatives” tells you that the company is waving a white flag.
The Canadian company is basically conceding that it can no longer compete on its own as a publicly traded corporation. Either it will sell itself to a partner, or it will buy up all its stock and go private.
Going private would let management re-engineer the company out of the spotlight of the public stock markets.
For investors like you, the lesson of Blackberry is that you can never take your eye off a stock you own. And you can never afford to fall in love with a company just because its shares have treated you well in the past.
A little more than five years ago, Blackberry had a commanding position in the smartphone market. The iPhone was still an infant, and Android phones had just hit the market. Blackberry’s stock was near $150 a share and few people thought it could be knocked off its perch.
But the company fumbled the ball, and today Blackberry shares go for $10 apiece.
That’s an epic fall, and I am sure there are some shareholders who rode it all the way down because of ill-placed loyalty or an equally ill-founded hope that the company would, at some point, turn it around.
After all, Blackberry had put the “smart” into smartphones. It practically invented mobile email and messaging, and made a lot of people rich along the way.
But staying on the pinnacle is incredibly difficult, especially in technology. Look what’s happened to Dell, Motorola, Nokia, Yahoo and Hewlett Packard. Some think Microsoft is positioned for a tumble and Apple too.
I’m not drawing any conclusions about those two, but I will say this: don’t stick with a stock when it starts to erode. It can get away from you in a hurry.
Take profits judiciously, and keep doing your homework on every stock you own. Former hedge fund manager and current market commentator Jim Cramer says to do 30 minutes of research a week on every stock you own. That way, you’ll never have to ask yourself, “What happened to my stock?!?!?!”