FORTUNE – It’s getting hard again to be a believer in BlackBerry.

Friday morning, the company looking for a turnaround in the hyper-competitive smartphone market posted its earnings for the three-month period ended June 1, 2013. To say that Wall Street had been divided over how well or how poorly the company had performed in the quarter is a bit of an understatement.

Blackberry (BBRY) has been through a rough time, falling from the privileged status of being the maker of the most coveted mobile phones to an also-ran over the past several years. Many tech observers, investors and analysts had written the company off for good.

But over the past few weeks, a small band of contrarian analysts emerged to say that a new CEO, the introduction of the BlackBerry 10 software, and two new lines of phones it powered, were adding up to a stronger-than-expected quarter. The stock, which last fall sank to levels not seen in a decade, crawled back into the double digits.

Other analysts took a more bearish stance, warning that expectations of a BlackBerry rebound were getting too high. As of Thursday’s close, BlackBerry had gained 22% in 2013, comparable to Google’s (GOOG) 24% rise and much better than Apple’s (AAPL) 26% decline.

Then came the actual numbers. BlackBerry reported revenue of $3.06 billion, lower than the consensus estimate of $3.36 billion. Worse, it posted a net loss of 13 cents a share. Analysts had been forecasting an eight-cents-a-share profit. The stock closed down Friday at $10.46, a decline of 28% and its lowest level in seven months. In one day, BlackBerry lost $2.1 billion in market value.

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In a conference call to discuss the earnings, BlackBerry executives spent some time discussing a $72 million decline in revenue because of foreign currency restrictions placed by the US on Venezuela, where the BlackBerry has remained a popular phone. The Venezuela effect accounted for only a fraction of BlackBerry’s $300 million revenue miss.

The bigger concern is that the BlackBerry 10 operating system isn’t catching on with phone buyers. CFO Brian Bidulka said the company shipped 6.8 million smartphones in the quarter, up 13% from the previous quarter. Of those, 2.7 million were BlackBerry 10 devices – the Q10 and the Z10.

That was below the forecasts of more bullish analysts of between 3 million and 4 million Blackberry 10 devices shipped. A separate report by comScore Friday showed that BlackBerry’s share of the U.S. smartphone market declined to 4.8% from 5.4% in the past three months, while the market shares of Android and iOS both increased.

Analysts at Société Générale, Wells Fargo, RBC Capital and Jefferies & Co. were among those who forecast stronger sales of BlackBerry 10 devices and a better quarter for the company. Two of those analysts appeared on CNBC Friday to maintain that the company still has some promise longer-term.

That view was echoed by BlackBerry CEO Thorsten Heins in the conference call. Heins said the company’s turnaround would bear more signs of success in the coming year. “Blackberry 10 is still in the early stages of its transition,” he said. “In fact, we’re only five months into what is the launch of an entirely new mobile computing platform.”

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Other analysts weren’t so optimistic. Kevin Smithen and Zach Horat at Macquarie Equities downgraded the stock to underperform. “The future is bleak for BlackBerry as an operating business,” they wrote in a research note, foreseeing a breakup or liquidation of the company as a likely scenario. BlackBerry’s fate is looking more like Palm, they said, another promising mobile device maker that fell out of favor, was bought by Hewlett-Packard (HPQ) and shut down. In that sense, its cash and patents may be its most valuable assets.

While it’s easy to bash analysts for making inaccurate forecasts, many of the contrarians noted in their predictions how difficult it was to gauge how many BlackBerry 10 devices were being sold by querying carriers and retailers. Evidence was scattered and contradictory, providing bulls and bears alike fodder for their arguments.

The broader issue facing BlackBerry, however, is one that faces Apple, Samsung and other manufacturers. The high-end of the smartphone market, which BlackBerry 10 is aimed at, has become saturated. Most of the sales are for lower-priced devices, which explains why the majority of BlackBerry shipments were in older models. The problem is, those cheaper phones mean less profit margin for manufacturers.

Despite its problems, BlackBerry remains is decent financial health. The company’s operations generated $630 million in cash last quarter – not great, but it’s not burning through cash either. Cash and short-term investments in the quarter rose to $2.8 billion from $2.6 billion a year earlier.

So barring a hostile takeover or a generous suitor, BlackBerry is likely to continue slogging it out in a smartphone market where profits are getting harder and harder to mine. The most likely outcome could be somewhere between the bearish scenario of a liquidation and the bullish vision of a robust turnaround. It will still be Android and Apple’s world, but there’s a place for Blackberry somewhere on its fringes.