Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Research In Motion Ltd (BBRY)’s Wild Card

Page 1 of 2

Research In Motion Ltd (BBRY)Once a status symbol Research In Motion Ltd (NASDAQ:BBRY) now faces an existential crisis since the surge of Apple Inc. (NASDAQ:AAPL) and Samsung in the smart-phone arena. The stock price has taken a huge hit sliding over 90% from its all-time high. Revenue has been continuing its decline and the customer base is shrinking. So is it the beginning of the company’s end or is there still some value left in the company?

BB10: Blackberry’s wild card

In its attempt to make a comeback, Research In Motion Ltd (NASDAQ:BBRY) came up with a new operating system the BB10. The first quarter after its release of the Z10 smartphone it reported a net profit of $98 million in the latest quarter up from $9 million in the previous quarter and a loss of $125 million in the quarter before that. It sold nearly 1 million Z10 devices even though it was launched in the U.S. near the end of the quarter. Over 55% of Z10 buyers were coming from other platforms, which shows Research In Motion Ltd (NASDAQ:BBRY) has finally got it right. Not to forget there are a lot of BlackBerry loyalists who love their best-in-class physical keyboard and have therefore not bought the Z10 in anticipation of the qwerty Q10. The Q10 is set to go on sale in the U.S. by the end of May for around $249. The Q10 is selling extremely well in the UK and Canada and is amongst the fastest selling phones at Selfridges.

The BB10 devices will have a personal assistant named Viki just like Apple’s Siri. Siri has been a huge catalyst for Apple phones so it goes without saying that Viki might further boost the already promising BB10 device sales. Even Google Inc (NASDAQ:GOOG) tapped into this new innovation and created Google Inc (NASDAQ:GOOG) Now. Google has also received a nod from Apple Inc. (NASDAQ:AAPL) to incorporate Google Inc (NASDAQ:GOOG) Now into apple’s latest iDevices. Aside from Viki, BlackBerry has been further strengthening functionailty by expanding its app base to 100,000 apps from 70,000 at the launch of BB10.

Not to forget, Research In Motion Ltd (NASDAQ:BBRY)’s security is still the best in the industry. It got its BB10 operating system authorized by the U.S. Department of Defense for agency use.

Improving margins

The company posted a gross margin of 40.1% in Q4, up from 30.4% in the third quarter. The factors that led to the change were the cost cuts coupled with new high-margin phones.

It cut its operating expenses to $4.7 billion for fiscal 2013, from $5.1 billion the previous year and plans on reducing the headcount by 30% by the end of this year.

The BB10 devices are amongst the highest earning phones for the company. At the same time it is important to note that Apple Inc. (NASDAQ:AAPL)’s margins have been declining. From 50% in 2011 Apple’s margins have now declined to 37.5%.

Big orders lining up

The company is on a roll and has been receiving bulk orders from big corporate houses. There is an order for 1 million Z10 devices by Brightstar Corporation.

The company also secured its biggest corporate order for 3000 BlackBerry10 devices from Canadian Tire Corp.

Telefonica received a loan of $265 million from the Canadian government for BB10 devices.

The German government has ordered 5000 Z10 devices.

Seems undervalued when compared to peers

Company P/B P/S EV/EBITDA ROI
BLACKBERRY 0.85 0.63 4.39 22%
AAPLE 3.54 2.47 6.61 30%
GOOGLE 2.98 5.14 13.32 16%
NOKIA 1.21 0.33 4.36 2%

With the global smartphone sales expected to exceed 910 million units in 2013, even if Research In Motion Ltd (NASDAQ:BBRY) could garner 5% market share as some analysts expect, this would lead to sales of over 42 million units.

Page 1 of 2
Loading Comments...