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We are days away from the next BlackBerry (NASDAQ:BBRY) earnings call. It obviously would be prudent for current stockholders to be aware of what would be considered good results. This has become increasingly harder in the past few weeks because of the barrage of reports from a multitude of analysts. Separating the noise and bringing clarity to this situation is paramount for proper decision-making. I am still bullish on BlackBerry, but I feel that success will be a steadily increasing slope over the long haul. Let's go step by step and look at each piece of the puzzle that gives us the insight we need.

Currently, BlackBerry has released the Z10 and the Q10 globally with success. It can be argued what success truly means, but it is clear that the new devices have not been dead on arrival. There is a niche market at the minimum. The CEO of BlackBerry, Thorsten Heins, had outlined a timeline for all the devices in February. With a couple of weeks of leeway, Heins has fulfilled this expectation. He also was truthful about the new mid-level device called the Q5, which is aimed at lower-income-based countries.

Q5

This new device is very similar to the Q10, except it includes lower-grade components, reducing overall costs to the consumers. The Carphone warehouse in the U.K. has the Q5 available for pre-order now. The projected availability date is July 1. While the purchase price without a contract is £319.95, the two-year contract price is free on a £21 monthly plan. It appears as if the carriers are artificially increasing the off-contract price as an incentive to remain in a contract.

The average selling price from BlackBerry for the Q5 will be evident with the release of financial statements in September. The Q5 may also achieve niche market success in North America and the U.K., with teenagers looking for a low-cost alternative. It will be interesting to find out if the Q5 is being built at the expense of Q10 and Z10 production volume. If the Q5 is being built in parallel with the Q10 and Z10 at other manufacturing facilities, top-line revenue could increase substantially.

A10

The A10 is currently in the rumor stage, so I will not entertain much about it now. What I will say is that the phone will be coming closer to the fall and it is most likely to be a full touchscreen, comparable to Samsung's S4. This shows BlackBerry's systematic approach to developing its ecosystem before it directly competes against the iPhone 5 and the Samsung S4. Things don't change overnight, and I like the direction BlackBerry is taking.

U.S. Sales

The data given below is an extension of a previous article, aimed at providing insight into smartphone acceptance. The Q10 has a similar trend to the Z10 U.S. launch, and sales should be similar.

Carrier

Phone

Rating /5

Referral (%)

# Reviews

Reviews / day

ATT

Z10

4.8

95

84

3.5

SIII Galaxy

4.7

96

1556

5.5

Q10

-

-

-

-

iPhone 5

-

-

2

-

Lumia 920

4.4

86

168

1.2

Lumia 820

4.4

88

16

.1

Verizon

Z10

4.5

92

57

2.6

Q10

4.7

89

26

2.6

SIII Galaxy

4.2

77

2717

9.1

iPhone 5

4.5

89

2073

10.5

Lumia 822

4.1

76

576

4.1

T-Mobile

Z10

4.7

93

72

8

Q10

4.4

83

29

2.2

SIII Galaxy

4.8

97

2486

8.8

Lumina 810

4.6

91

75

.5

iPhone 5

April 12

Release date

Data from Verizon, ATT and T-mobiles websites.

Analyst Upgrades

Over the past 60 days, analyst estimates have improved drastically. It is apparent that supply chain checks by the major analysts look promising. It is important to note that while the next two quarters look promising, the jury is still out on the long-term prognosis. This is reflected in the estimates for FY 2015 and FY 2016. A short squeeze may also be difficult, with traders willing to wait for FY 2015.

RBC Mark Sue

Upgrade - Market Perform

3.5M

.35 FY14

Société Générale

Upgrade - Buy

5M

.85 FY14

Jefferies

Buy

+3M

-

ScotiaBank

Buy

-

.33 FY14

Bernstein

Underperform

Fiscal
Year End

Consensus
EPS* Forecast

High EPS*
Forecast

Low EPS*
Forecast

Number of
Estimates

Over the Last 4 Weeks
Number of Revisions
Up Down

Feb 2014

0.29

1.57

-0.57

19

1

0

Feb 2015

-0.14

1.02

-1.32

12

0

1

Feb 2016

-0.13

0.08

-0.44

3

0

0

Feb 2017

-0.68

-0.68

-0.68

1

0

0

(Read more here.)

Current

1 Week Ago

2 Weeks Ago

3 Weeks Ago

High Target Price Estimate

22.40

22.40

22.40

22.40

Low Target Price Estimate

10.16

10.16

10.16

10.16

Mean Target Price Estimate

15.74

15.74

15.74

15.10

Standard Deviation

4.66

4.66

4.66

4.58

Date of Most Recent Estimate

05/15/13

05/15/13

05/15/13

05/15/13

Consensus EPS Estimates Trend

Qtr (05/13)

Qtr (08/13)

FY (02/14)

FY (02/15)

Current Estimate

0.07

0.30

0.49

0.66

7 Days Ago

0.07

0.30

0.49

0.66

30 Days Ago

0.07

0.30

0.49

0.65

60 Days Ago

-0.03

0.06

-0.02

0.65

90 Days Ago

-0.22

-0.19

-0.51

-0.95

Verizon Wireless

Verizon (NYSE:VZ) launched the Q10 last week, and it is a bit early to evaluate how sales are progressing. This is likely due to the staggered rollout within Verizon for the Q10. I have evaluated which states received product a few days into the launch, and which states had yet to receive stock. The results were surprising, as it appeared that any state east of Colorado did not receive stock. Stock likely was being received from Asia on the West Coast and moving over land. Additionally, I called a few stores in California and they appeared to have stock available. While this was not extensive, it did illustrate that stock was available.

Stock

No Stock

Arizona

Alabama

Colorado

New York

Hawaii

Delaware

Idaho

Georgia

Washington

Illinois

California

Kentucky

Peter Misek's Take

Note: The information in this section was based on an interview last week in Canada on the Business News Network (BNN).

Bullish Jefferies analyst Peter Misek has been vocal against most bearish reports. Many people would even say he is a BlackBerry fanboy; this is not the case as he uses an iPhone. The iPhone is connected to the office BlackBerry Enterprise Server 10.1, and Misek has stated the server saves Jefferies $10-$20 per user in carrier data charges. Misek's estimates are based on over 400 component suppliers. The operational and revenue data from the suppliers are provided monthly, with visits to some suppliers conducted up to three times a year.

On the retail side, two surveys are conducted with the top 30 largest chains. This also includes random store checks conducted globally. The estimates that Misek obtains are very similar to the retail store checks that I have conducted in Toronto. The data that Jefferies maintains claims to be 80% accurate over a 10-year period.

One of the more important points that Peter Misek made was that most of the growth is in the mid- to lower-end smartphone market. This is an area that Apple (NASDAQ:AAPL) has yet to make significant progress in, and illustrates why BlackBerry is moving fast with the Q5. There is significant competition in the low-end space with companies such as Huawei and ZTE mass-producing cheap devices. BlackBerry has stated that the mid-tier and not the low tier is their target market for the Q5. I am in agreement that most of the growth globally is in the mid- and low-end tiers.

Jefferies has estimated BlackBerry stock will trade at a P/E of 12, with a stock price target of $22. The consensus P/E is 15.

BBM Channels

BlackBerry has announced a new service under BlackBerry Messenger called channels. It combines the concept of Facebook (NASDAQ:FB) with the concept of Twitter. For more information, please read the previous article, which contains some relevant screenshots. Currently, BBM channels is in beta testing, with an anticipated release date for iOS and Android sometime this summer. The program administrator known as Jessie has stated in the beta program:

... we received a bunch of inquiries about our big announcement, we don't know when it will be released except that it will be this summer...

BlackBerry's channel has surpassed 10,000 beta users on one channel. New features are added weekly based on suggestions from the user community. It appears as if there is a wide acceptance for this service with many possibilities. I have set up a BBM channel that I will be testing as well. During the earnings report next week, I will be broadcasting live on the channel and users can post replies. This will illustrate the possibilities of this new service. If you are adventurous, the BlackBerry channel pin is C00058296.

Conclusion

I have confidence that BlackBerry is on track to beat the Street's estimates next week. I cannot envision a short squeeze occurring as the September earnings call will also be valuable. A new floor in the $16 to $18 range would be a healthy start, and most probably will trade in this range until September. The fall period will start to show non-hardware revenue and provide a clearer picture on the direction of BlackBerry. Anything over $0.50 EPS for this quarter will be a strong positive.

Source: BlackBerry: More Devices, More Data, And More Revenue