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By: Ahmed Ishtiaq

Research In Motion (BBRY) changed its name and ticker with the launch of its newest Smartphone and operating system. The company recently launched its new phone (Z10) and operating system (BlackBerry 10). In a previous article, I mentioned that there is a great opportunity for short-term trading with this stock. BBRY went up steadily till the launch of the new phone; however, the stock lost 27% in a few days after the launch. A lot of traders and investors had poured in before the launch and started to take profits after the launch of the new Smartphone. In the last two days, the stock has started to regain some of the lost value. BlackBerry stock has again gone up almost 15%, and I believe that the stock will continue its rise. I do not believe BlackBerry stock should be bought only with a short-term view. There is a lot of value in this stock for the long term investors.

Z10 Sales Going Great

BlackBerry Z10 has received a great reception from the Smartphone enthusiasts. The handset is selling like a hot commodity in most of the markets. It is already sold out in U.K. and Canada. Furthermore, there are strong volumes of pre-orders in UAE, U.S and other countries. Furthermore, BlackBerry Z10 has received record order at Canadian wireless carrier BCE Inc. (BCE). This new set has received probably the best response from the customers, compared to its predecessors. U.K. is proving to be the best market for Z10. At the moment, carriers like O2, Vodafone, EE and Orange have extremely strong demand for the new handset. In this new handset, BlackBerry has made an effort to match Apple (AAPL) and Samsung (OTC:SSNLF), with new features and improved software.

BlackBerry Z10 is attracting all sorts of customers, and I expect the company to win back its lost share of enterprise customers. Moreover, the company is holding its first developer event in Europe after the launch of the handset. Z10 will be launched in other European markets such as, Germany, France, Switzerland, Spain and Netherlands during this week. I expect the handset to have strong sales in these countries as well.

New Look, New Apps, Love for Developers?

The biggest reason for BlackBerry handsets to be fall behind competition was the lack of apps. However, in the new Smartphone, the company has tried to tackle this issue. At the moment, there are 70,000 apps available on BlackBerry platform, and new developers are joining every day. BlackBerry has launched a limited edition Z10 with flaming red exterior, only for developers. It is a marketing stunt, which I believe will work well for the company, and it will attract a considerable number of developers.

In my previous article, I categorized BlackBerry as a risky investment. I was a little cautious, even though I was optimistic about the launch. The main reason for my cautiousness was the intense competition in the market, and customer loyalty towards certain brands. Over the years, Apple and Samsung have built strong customer loyalty, and it can pose a challenge to any other player in the smartphones market. However, BlackBerry has a loyal fan base of its own, which has come in numbers to welcome this new handset. Next quarter earnings may prove to be best for BlackBerry in the recent past. The risk has not abated; however, it has decreased substantially due to the strong sales in the first week.

Peer Comparison

The biggest competitors for BlackBerry are Apple Inc, Samsung Electronics and Google Inc (GOOG). The table below lists some important metrics for comparison.

BBRY

AAPL

GOOG

SSNLF.PK

P/E

N/A

10.3

24.0

14.0

P/B

0.7

3.3

3.6

1.9

P/S

0.5

2.6

5.0

1.6

EPS Growth

-12.40%

69.40%

16.60%

21.40%

Operating Margin

-10.80%

33.50%

25.40%

13.70%

Net Margin

-6.90%

25.40%

21.40%

11.30%

ROE TTM

-8.90%

38.40%

16.50%

16.60%

Debt to Equity

0.00

0.00

0.00

0.00

Source: Morningstar

BlackBerry has extremely poor margins at the moment compared to its competitors. The margins clearly outline the position of the company at the moment. However, these margins will prove substantially due to the strong sales of BlackBerry Z10.

Summary

There is still an opportunity for short-term trading in this stock due to high volatility. However, I believe BlackBerry is an extremely attractive long-term investment. Recent dip in the stock price offers a great opportunity to add to the position and enjoy substantial gains that lie ahead. BlackBerry has made a great comeback in the smartphones market, and I expect it to give a real challenge to Apple and Samsung. The company has a loyal customer base, and its hardware is one of the best in the market. Current year will prove to be an extremely important year for the company. This year will be remembered as the year a great organization successfully re-invented itself.

Source: Z10 Takes BlackBerry Higher