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BlackBerry (BBRY) today launched a new mid-range smartphone targeted at European and Asian markets. The Q5, as it is known, will have a traditional BlackBerry Qwerty keyboard and be available in four colors -- black, white, red, and pink. BlackBerry said the products would launch as early as July in Europe, the Middle East, Africa, Asia, and Latin America. There's no word on pricing yet.

The introduction of a new lower-priced BB10 powered phone by BlackBerry is timely, beating Apple (AAPL) to the punch in key markets including China. The form factor is similar to the very popular BlackBerry Curve and is likely to replace it in world markets. At the same time, BlackBerry's applications library has grown to over 120,000 applications, according to the company.

The impact on BlackBerry could be significant. If BlackBerry can convert its BB7 Curve users to the Q5, it could sell millions of the new devices this year, following strong demand for its Z10 and Q10 models. The Curve was particularly popular among budget-conscious younger users. European demand may get a boost from the Export Development Corporation's $200 million credit facility provided to Telefonica earlier this year.

If the new Q5 is priced at $299.00 to $399.00, it will be competitive with a wide range of models while still likely to provide BlackBerry with margins of 30% or higher. BlackBerry's higher-end Q10 and Z10 models are believed to have margins over 50%. A lot of things have changed at BlackBerry since Thorsten Heins took over and one of them is execution. Heins comes across not as a smooth presenter like Steve Jobs but as an honest, frank, and direct executive whose engineering roots are evident. He is humble, understated, and, in my view, very effective. Delivery of the Q5 this early in 2013 is an example.

BlackBerry also announced that its popular BBM messaging service would be available for iOS and Android devices, and launched BES 10.1 to support BYOD across the enterprise, fulfilling expectations Heins had set earlier. In my view, BlackBerry will have a strong year in 2013. I believe the year could see net income over $2.00 per share as set out below:

Device

Volume (millions)

ASP

Margin %

Margin $ (millions)

Z10

6.0

$500

50%

$1,500

Q10

5.0

$500

50%

$1,250

Q5

4.0

$350

30%

$420

Legacy BB7

20.0

$200

10%

$400

Playbook tablets

.05

200

0%

$0

Software & Service

$4,000

75%

$3,000

TOTAL

$6,600

Operating Costs

$3,300

R&D

$1,700

Taxes (29%)

$464

Net Income

$1,136

EPS

$2.17

The above forecast is based on 39 million devices with almost half of them being BB10. With high margins on the new devices, BlackBerry could surprise on the upside to even these figures. I am long BlackBerry.

Source: BlackBerry Is Keeping Its Promises To Launch New Devices And Services