Apple will most likely use cheaper parts for low-cost phones. Current suppliers whose business has been on the decline could consider producing less expensive parts, since the demand for cheaper iPhones in markets in Asia and Africa may take a while to exhaust. It is not clear what Apple or its suppliers will decide to do, but all will obviously be looking out for their best interests. Some investors may take this opportunity to buy stocks while prices are low.
With a little spin these issues can be rephrased as opportunities. Supply chain issues mean that there is pent-up and unmet demand.
BlackBerry’s share price jumped to $17.90 on Jan. 23, its highest since 2011, after Chief Executive Officer Thorsten Heins reiterated that the company is considering strategic options, including licensing of software and selling its hardware unit.
Scotiabank raised its rating on blackBerry’s shares to sector outperform, saying the expected revenue from customers upgrading to Blackberry 10 alone could surpass analysts’ estimates. Scotiabank analyst Gus Papageorgiou estimates that BlackBerry will be able to sell 29 million Blackberry 10 units next year, while Macquarie Capital analyst Kevin Smithen is expecting that strategic alliances may be disclosed in the next several weeks.
Last May the company hired and RBC Capital Markets to help it evaluate options. Chief Executive Officer Thorsten Heins revealed that BlackBerry’s focus is on exploring software licensing deals or strategic partnerships, although he hasn’t ruled out selling the company as an option.
Canadian Industry Minister Christian Paradis said, “We hope to see companies like BlackBerry grow up organically to become global players.” Industry Canada would have to review and approve any sale if it conforms to the country’s laws on foreign take-over.
The company hopes the new BlackBerry 10 devices will help it win back lost market share from Apple’s iPhone and smartphones running Android software. BlackBerry is in no hurry to decide. Heins said, “First and foremost, it’s important to bring BlackBerry 10 successfully to market.”
That’s a big “if” in the increasingly competitive smartphone space.
| NOK | Nokia | NA | 0.4 | 1.46 | NA | 5.0% |
| BBRY | BlackBerry | NA | 0.73 | 0.97 | 11.14 | 5.0% |
| MSFT | Microsoft | 15.32 | 3.2 | 3.22 | 11.3 | 8.4% |
| GOOG | 23.22 | 4.94 | 3.45 | 18.56 | 14.7% | |
| AAPL | Apple | 9.97 | 2.51 | 3.49 | 9.43 | 13.8% |
Apple has the lowest price-to-earnings ratio and the second-highest projected earnings growth. This makes it much less speculative than BlackBerry or Nokia. It is also cheaper than Microsoft and Google.
At current price levels near $450 per share, Apple is an easy choice for investors.
The article iPhone Shipments Down: Should Investors Look Elsewhere? originally appeared on Fool.com and is written by Bill Edson.
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