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Time to jump off the BlackBerry bandwagon?

March 4, 2014: 1:31 PM ET
There are lot of investors riding the BlackBerry bandwagon. Maybe it's equipped with QNX Bluetooth technology.     There are lot of investors riding the BlackBerry bandwagon. Maybe it's equipped with QNX Bluetooth technology.

There are lot of investors riding the BlackBerry bandwagon. Maybe it's equipped with QNX Bluetooth technology.

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.

CrackBerry addicts rejoice! It seems that BlackBerry is here to stay.

At least that what Wall Street -- and Bay Street for my neighbo(u)rs to the North -- think about the company.

Shares of Ontario-based BlackBerry (BBRY) are up nearly 45% so far this year. That makes it the top performer in CNNMoney's Tech 30 index.

BlackBerry even surged on Monday, rising nearly 4% as many global investors were busy worrying about whether Crimea was going to be the 2014 equivalent of 1939's Sudetenland.

So why has the pride of Canada (okay ... that's probably a term better used for the men's and women's Olympic hockey teams) surged? The company is still struggling.

Analysts expect BlackBerry to report a quarterly loss of $329 million and a year-over-year sales decline of 55% when it releases its fiscal fourth-quarter results later this month.

Making matters worse, Wall Street is predicting that the company ended the quarter with 58.5 million subscribers. That would be down 7% from the third quarter and a drop of 23% from a year ago.

The main reason for BlackBerry's problems are well-known. It was too late to jump onto the smartphone wave and was overtaken by Apple (AAPL), companies using Google's (GOOG) Android operating system and even those running Microsoft's (MSFT) Windows Phone.

As we all know from just having watched the Olympics, there is no medal for fourth place.

Related: BlackBerry unveils new Q20 phone

But none of this seems to matter right now because investors are infatuated with new CEO John Chen, who has pledged to turn the company around.

I realize it's ludicrously absurd to start taking suggestions for CEO of the Year on March 4. But I've been called worse things than ludicrously absurd ... so Chen has to be a leading contender as of right now.

And there are indications that Chen is righting the ship. Reports that Ford (F) may replace Microsoft technology in future cars with BlackBerry's QNX have helped lift the stock in the past week.

If the rumors are true, that's a big win for BlackBerry, whose Bluetooth-based tech is already used for entertainment and communications functions in Audi and BMW automobiles.

Related: Car makers to offer iPhone platform

BlackBerry has also gotten a bump thanks to Facebook's (FB) acquisition of messaging service WhatsApp for a stunning $19 billion. The deal seemed to be a wake-up call to investors who may have forgotten that BlackBerry owns messaging platform BBM.

I don't think it's a coincidence that BlackBerry's shares are up nearly 20% since the WhatsApp purchase was announced less than two weeks ago.

Still, you have to wonder if the easy money has now been made in BlackBerry. It may be time to jump off that bandwagon.

As I wrote late last year about Chen, his main job over the next few months is to merely convince investors and customers that the company has a viable future. He doesn't necessarily have to come up with a magical solution to restore BlackBerry to its former glory.

If you talk a good game and stress patience, the new CEO honeymoon period can last for a pretty long time. Just ask Meg Whitman and Marissa Mayer. Shares of HP (HPQ) and Yahoo (YHOO) -- while both hitting some rough patches -- are not far from their 52-week highs and are up a lot over the past year.

But investors may eventually grow tired of viewing BlackBerry as a plucky underdog story. You can't be in turnaround mode forever.

Ultimately, Chen is going to have to prove that BlackBerry has a fighting chance to remain relevant. Its future may lie more in the world of auto tech. Maybe Chen will find a way to sell the BBM unit ... or at least make more money off of it.

But he needs some growth strategy. The numbers are not pretty.

BlackBerry ended the third quarter with $3.2 billion in cash. It got $1 billion of liquidity from a group led by investor Fairfax Financial (FRFHF) to help stop the bleeding.

Related: T-Mobile razzed for dissing BlackBerry

So it will be very interesting to see how much cash BlackBerry burned in the fourth quarter. If it was a lot, then Chen may suddenly find that investors won't be as forgiving.

After all, analysts are predicting that BlackBerry's sales will fall this year and next as it continues to lose subscribers. Wall Street is also forecasting another two years of losses.

That's why Chen should enjoy living in the limelight for now. It is the universal dream, according to some other Canadian legends ... rock power trio Rush! And on that note ...

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Paul Lamonica
Paul R. La Monica
Assistant Managing Editor, CNNMoney

Paul R. La Monica is an assistant managing editor at CNNMoney. He is the author of the site's daily column, The Buzz, and also tweets throughout the day about the markets and economy @LaMonicaBuzz. La Monica also oversees the site's economic, markets and technology coverage.

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