Even though BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) has done a nice job diversifying itself away from its traditional handset business, CEO John Chen and his management team are still convinced they can make a phone that will wow consumers.

The newest phone from the company—dubbed “Venice”—looks to be scheduled for a November release. According to reports, the phone would have one big difference compared with BlackBerry’s other offerings: instead of running BlackBerry’s operating system, Venice is widely expected to use Android as its OS.

I can personally attest to what a big deal this simple change entails. In July I was in the market for a new phone and ended up with the BlackBerry Passport. The big issue with it is the lack of apps. App developers have made the conscious decision to shun the BlackBerry operating system, choosing to focus on the 95% of the market that run Android and iOS. Can’t say I blame them.

I ended up returning the Passport. And I’m a BlackBerry shareholder. You’d think I’d have extra incentive to keep the phone.

Even though I think BlackBerry’s latest phone is a good idea and wouldn’t be at all surprised if it was a moderate success, I’m really hoping for the phone to flop. I want it to fail so badly that BlackBerry never tries to make another phone again.

Although that sounds very odd, it actually makes all sorts of sense.

A look at the handset business

Although BlackBerry has launched four different handsets in the last year—the Porsche Design 9983, Passport, Classic, and Leap models—it’s still losing market share. And most importantly, it isn’t making any money.

In 2014 the company earned just $100 million in operating income from its handset division. And since then, sales have continued to decline. Compared with the same quarter a year ago, recent results showed a 30% haircut in revenue from the hardware division. And that’s after introducing new phone models.

Management seems convinced there will always be a niche for phones with a physical keyboard. Perhaps that’s the case, but that niche sure seems to be shrinking fast.

A better way

There’s a really compelling reason why BlackBerry should get out of the handset business, besides the persistent shrinking revenues.

BlackBerry owns a lot of patents, a collection it’s currently trying to monetize. But it can’t get too excited about suing a competitor that uses its patented technology since there’s a pretty good chance that BlackBerry uses some of that company’s patented technology in its phones. For that reason, none of the major smartphone makers really get excited about filing lawsuits.

If BlackBerry got out of the handset market, it would be free to file all sorts of lawsuits without consequence. According to one analyst, BlackBerry could bring in as much as $400 million per year just from licensing its patented technology. There would be very little costs involved, meaning most of that revenue would flow to the bottom line.

How big of an impact would it have? In the company’s fiscal 2015, BlackBerry lost $304 million. Through the first quarter of its fiscal 2016, it earned a $68 million profit. Obviously, $400 million would make a sizable addition to the bottom line.

There are plenty of reasons for investors to be excited about BlackBerry’s software business. The Internet of Things has huge growth potential, and BlackBerry is well positioned to take advantage. But when it comes to phones, the company is too far gone. If the new device flops, perhaps management will finally pull the cord on the dying division, much to the delight of shareholders.

A better choice than BlackBerry

BlackBerry isn't a bad company. It's just hard to get bullish on the stock until it loses the weight of the hardware division.

Instead, we think you should take a look at what our analysts have identified as one TOP stock for 2015 and beyond--a stock with a tollbooth-like business; a solid management team; and a reliable, consistent, and rising dividend--and you can download the name, ticker symbol, and price guidance absolutely FREE.

Simply click here to receive your Special FREE Report, "1 Top Stock for 2015--and Beyond."


Let’s not beat around the bush – energy companies performed miserably in 2015. Yet, even though the carnage was widespread, not all energy-related businesses were equally affected.

We've identified an energy company we think offers one of the best growth opportunities around. While this company is largely tied to the production of natural gas, it doesn't actually produce the gas. Instead, it provides the equipment required to get natural gas from the ground to the end user. With diversified operations around the globe, we think it's a rare find in the industry.

We like it so much, we’ve named it as 1 Top Stock for 2016 and Beyond. To find out why, simply enter your email address below to claim your FREE copy of this brand new report, "1 Top Stock for 2016 and Beyond"!

Fool contributor Nelson Smith owns shares of BlackBerry.