Research In Motion Ltd (BBRY): Who Will Buy BlackBerry?

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Research In Motion Ltd (BBRY)It’s certainly been a hectic day for Research In Motion Ltd (NASDAQ:BBRY). The rumor mill is running at full speed, BlackBerry’s share price took a hit at the open after an analyst predicted poor smartphone sales results, and there’s even talk that Research In Motion Ltd (NASDAQ:BBRY) will sell all or part of itself — again. As if BlackBerry CEO Thorsten Heins doesn’t have enough on his plate, much of which he brought on himself by saying things like Apple Inc. (NASDAQ:AAPL)‘s iPhone is out of date and that tablets will become obsolete in five years, among other head-scratchers. Heins’ comments aside, the shame is that the nearly 15% stock appreciation Research In Motion Ltd (NASDAQ:BBRY) shareholders have enjoyed the past month or so just came to a screeching halt.

Z10 and Q10 sales
The bad news first: Today’s 5% drop in BlackBerry’s stock price was largely due to a report from a Pacific Crest Securities analyst indicating that production cuts on the new Z10 and Q10 devices are imminent. The upside for BlackBerry shareholders is that the headline paints a gloomier picture than what reality shows. According to the analyst, Research In Motion Ltd (NASDAQ:BBRY) is producing between 1.5 million and 2 million smartphones a month — not bad, considering the Q10 is offered in only limited markets.

The problem, according to Pacific Crest Securities, is that Research In Motion Ltd (NASDAQ:BBRY) is selling only an estimated 1 million to 1.25 million units a month. Clearly, the math doesn’t add up, and the result will be reduced production at some point in the not-too-distant future. The reasoning’s logical, but it neglects to factor in a key point: The much-anticipated Q10 hasn’t been rolled out in the U.S. yet. With its physical keyboard, a favorite feature of U.S. BlackBerry fans, the Q10 should give device sales a much-needed boost.

Another phone in the mix?
As mentioned on more than one occasion, Research In Motion Ltd (NASDAQ:BBRY) faces the same challenge Apple Inc. (NASDAQ:AAPL) does with its iPhone: Both are high-end, high-cost units, limiting their opportunities in emerging markets, especially as international carriers are unwilling or unable to subsidize pricing. Apple either has a mid-market phone in the works or will never offer anything other than premium iPhones, depending on which rumor you adhere to. But a lower-cost iPhone, just as with BlackBerry, is what needs to happen for both device makers to gain some traction.

Like Apple Inc. (NASDAQ:AAPL), Research In Motion Ltd (NASDAQ:BBRY) boasts a strong balance sheet, but it’s not sitting on $145 billion in cash and selling 37 million smartphone sales a quarter as Apple is. Apple’s last quarter was seen as “disappointing” because it had “only” a 6.5% jump in iPhone sales — a problem BlackBerry would love to have.

It was in early March when Heins squelched rumors that Research In Motion Ltd (NASDAQ:BBRY) would make a low-end phone, saying, “This is not BlackBerry.” But that doesn’t appear to have stopped Heins from exploring the mid-range smartphone market, assuming the rumors that an “R10” device will hit the streets are true. Apparently, the R10 looks and acts much like the Q10, but with a little less of everything. For shareholders, an R10, or whatever it may end up being called, could give BlackBerry the kick-start it needs to get back on track.

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