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BlackBerry's (BBRY +2.6%) big gross margin gain indicates "hardware gross margins rose from...

BlackBerry's (BBRY +2.6%) big gross margin gain indicates "hardware gross margins rose from around -2% in fiscal Q3 to 11% in fiscal Q4," writes Nomura's Stuart Jeffrey. Given BlackBerry lost 3M subs (and their high-margin service revenue) in FQ4, he suspects "BlackBerry raised hardware pricing across the board." While pleased with the jump, Jeffrey doesn't think future BB7 margin gains can be counted on. But Jefferies' Peter Misek, bullish going in, now thinks FY14 EPS of $1.50 or more is possible (consensus is at -$1.15), and believes the channel is free of inventory.
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  • Herr Hansa
    , contributor
    Comments (3083) | Send Message


    Great short interview video on Bloomberg with BlackBerry (BBRY) CEO Thorsten Heins. One thing that stands out is average revenue per user in their user base has increased. In an environment where smartphone vendors are seeing margins shrink, and carriers are placing pressure upon smartphone vendors to decrease subsidies, this is quite an accomplishment. At the moment, I think shareholders are likely to be satisfied with the performance of Heins as CEO.


    Short interest remains incredibly high. There are some large open interest positions remaining, though it looks like more recent activity volume has been clustered in weeklies. With so many short positions, shares in BlackBerry have gained quite a bit since the low in 2012. I would imagine that short interest is limiting the potential of shares to rise.


    Unfortunately the company is still at a very early stage in rolling out BB10 devices. The introduction of the Q10 will only have a small impact on the next quarterly earnings report. I still think it will be two more quarters until we can see how well the company is performing in this transition period. Due to the high volume of short interest, and the slow transition, I do not recommend investors buy shares at this time.


    Disclosure: long BBRY
    28 Mar 2013, 07:08 PM Reply Like
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