This Friday will be a big day for BlackBerry ( NASDAQ: BBRY ). The troubled smartphone maker is hoping for a renaissance, powered by a variety of new phones running the company’s QNX-based BB10 OS. The company’s upcoming earnings report will be the second since the BlackBerry 10 smartphones started to roll out worldwide. It’s also the first report since the launch of the Q10: the first BB10 phone with BlackBerry’s signature QWERTY keyboard. The Therefore the report will provide some insight into the demand for these new models.
The BlackBerry Q10.
The new BlackBerry platform is nowhere near challenging market leaders Apple and Google , but investors hope it will be able to carve out its own niche in the rapidly growing smartphone market . However, observers are sharply divided in Their beliefs about just how much traction BlackBerry 10 is Gaining. Next week’s earnings report and the associated conference call Should help a lot in terms of understanding the BlackBerry Whether you can mount a real comeback.
Analysts divided
As my Foolish colleague Tim Brugger recently highlighted, BlackBerry analysts just do not know what to expect from the company. Last Friday, an analyst at Societe Generale upgraded the company, writing That demand for the new BB10 phones has been stronger than expected, and the company could have sold more than 5 million units last quarter. Analysts at RBC and Jefferies are also expecting strong results for the quarter ended recently.
however, there is an even larger pool of analysts who are Convinced That BlackBerry is on the brink of collapse. This Wednesday, an analyst at Bernstein Research cut his rating on the stock, arguing That consumer demand for the new BB10 phones has fallen off rapidly. Similarly, a longtime BlackBerry bear James Faucette of Pacific Crest opined That the vast Majority of BB10 phones being produced are going into inventory, and That BB10 phone global demand is less than 500,000 units per month.
Let’s see some numbers
Opinion on Wall Street is THUS hopelessly divided. Over the past six months or so, a few analysts have crossed over from the bear camp to the bull camp or vice-versa, but for the most part they have become ever more Convinced That Their initial beliefs were true. Furthermore, the market is flooded with a variety of rumors about BlackBerry supply and demand. We need more hard data to get a decent sense of the company’s chances.
Should investors be looking for two things on Monday: a sales number for BlackBerry 10 phones (anything above 4 million is good, while anything under three million is bad), and some commentary on sell-through. Sell-through Refers to the number of units actually in the hands of users, and THUS excludes phones sold to wholesalers and retailers That are still sitting in inventory. Last quarter, CEO Thorsten Heins said That at least two-thirds to three-quarters of the units shipped to the BlackBerry had already sold through to end users. That’s a very strong figure, and investors need to see Whether the company can repeat That performance.
What does it all mean?
Nobody thinks BlackBerry is going to rival Apple or Samsung in terms of shipment volume in the foreseeable future. However, the BlackBerry has traded below book value for a long time, Which Implies That many people still expect the company to go out of business relatively soon. In other words, it’s not really fair to compare BlackBerry with Apple, Samsung, and Google for investment purposes. If BlackBerry can carve out a small niche in the smartphone market – perhaps 5% of the high-end and midrange segments – investors will be thrilled. Anything beyond That is just icing on the cake.
Realistically, you accomplish this, the BlackBerry needs to start by converting most of its existing subscribers to the BlackBerry 10 devices. Considering how outdated the legacy BlackBerry OS is, these users ought to be very excited about the opportunity to upgrade to a much snappier BlackBerry phone. If this is true, there Should be enough pent-up demand to soak up at least 4 million to 5 million Z10 and Q10 phones for the first several quarters of production.
BlackBerryIf you able to ship 5 million BB10 phones last quarter, and three-quarters of them sold to consumers through during the quarter, it would strongly suggest That this “turnaround scenario” is materializing. If shipments or sell-through are weaker Notably, it will confirm the bears’ fears about BlackBerry getting squeezed out of the smartphone market. For now, investors need to wait and see. Hopefully, BlackBerry’s future will become a lot clearer on Friday.
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