Everyone knew BlackBerry's earnings report on Friday would be bad, but not this bad.

BlackBerry's revenue in the third quarter fell by more than 50% from the same period a year earlier. The company's net loss for the quarter topped $4 billion due to restructuring costs and unsold devices. Yes, billion with a "b." And it barely sold more than 1 million BB10 devices, proving once more that its make-or-break smartphone product line is broken.

So, naturally, Wall Street reacted by dumping the stock and burning effigies of Alicia Keys, right? Not quite.

After initially declining by as much as 7% in pre-market trading Friday, BlackBerry's stock rebounded and was actually up by more than 15% at one point in morning trading. As of this writing, the stock is still up more than 13%. If that makes your brain hurt, you're certainly not alone.

Some of the stock's volatility can be chalked up to the fact that a significant number of BlackBerry shares are in the hands of short sellers who try to profit off the stock's declining price. But the big piece of news driving up the stock price, according to analysts we spoke with, is BlackBerry's decision to ink a deal with Foxconn to manufacture low-end phones in emerging markets like Indonesia, where the company still has some footing.

"BlackBerry knows they can't beat Samsung. They are not Apple. But there's an opportunity for them to still profitably sell smartphones in the global market," said Brian Blair, an analyst with Wedge Partners. "To be the Hyundai of the smartphone space. To be Kia."

Beyond that, analysts say investors are pleased with the company's growing cash pile. BlackBerry now has $3.2 billion in cash and investments, thanks to a $1 billion investment it received last month from Fairfax Financial Holdings and others. To put that another way, there is more confidence that BlackBerry has enough cash to stick around for at least another couple years.

John Chen, the interim CEO of BlackBerry, also did a good job of talking up the stock during an earnings call and an interview with CNBC after. He emphasized that the company has enough cash on hand to fuel a turnaround effort and noted that he expects BlackBerry will stop bleeding money in the 2015 fiscal year and be profitable again by the 2016 fiscal year.

That, of course, leads to a more fundamental question: Is the worst almost over for BlackBerry? And if not, how much worse could it get?

Has BlackBerry Hit Rock Bottom Yet?

For BlackBerry, 2013 started with a fresh face and ended with two black eyes and a bloody nose.

The company all but admitted its BB10 devices were flops, laid off significant chunks of its staff, tried and apparently failed to be acquired and replaced its CEO and much of its top executive team. This earnings report is another punch in the face to the company, but the hope is that it's the last big blow it suffers.

"We are not going to see the same kind of bleeding as we have," Blair said. "They've cleaned everything up now and they are starting from scratch as they enter the new year."

Cleaning house and shifting focus certainly doesn't guarantee that BlackBerry will succeed, though. BlackBerry may not compete head-to-head with Apple in the low-end market, but it will run up against other businesses like Lenovo and Huawei in these emerging countries.

"The bottom line is this is still a handset company and nobody is buying their handsets," said Bill Menezes, an analyst with Gartner. "Nothing they've done has worked so far and given the number of competitors who are out there who are doing the exact same thing, they have to basically reclaim their position. It's not just about holding onto their position."

"The jury is still out on whether they can do that," he added.

Even Blair acknowledges that there's a "70% chance" BlackBerry's new strategy will fail. "But that's a 30% chance of success," he said. "Apple had worse odds 15 years ago. I'm not saying they are going to be Apple, but there's hope."

Image: Prakash Singh/AFP/Getty