BlackBerry Is Keeping Its Promises To Launch New Devices And Services

| About: BlackBerry Ltd. (BBRY)

BlackBerry (NASDAQ: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 (NASDAQ: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:


Volume (millions)


Margin %

Margin $ (millions)
















Legacy BB7





Playbook tablets





Software & Service






Operating Costs




Taxes (29%)


Net Income




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.

Disclosure: I am long BBRY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.