Are we heading into a Good Friday for BlackBerry?

BlackBerry will announce Year-End and Fourth Quarter Fiscal 2013 results on Thursday

Thorsten Heins
By Chris Umiastowski on 27 Mar 2013 03:36 pm EDT

Tomorrow morning is the big day.  BlackBerry will announce its financial results for Q4.  Normally the call happens after market close, but the next day is Good Friday.  It’s bad practice to have a conference call on the afternoon before the end of the work week, so they moved the call to the morning.  That’s all there is to it. 

So what’s going to happen and how will the stock market react to it?  That’s what we’re talking about here. 

Since last quarter a lot has happened, and mostly good stuff.  BlackBerry 10 hit the market along with its first embodiment, the Z10, and the stock is up more than 20%.  Compare this to the market (both S&P 500 and Nasdaq) which are up about 10%, and Apple, which is down 10%. 

Given the stock price rally we’ve seen, it’s normal for analyst expectations to go up.  And up they have gone.  Just look at expectations for next quarter (Q1).  According to S&P Capital IQ, it analysts expect revenue of $3.26 billion.  Three month ago this estimate was $3.17 billion, and 6 months ago it was $2.66 billion.  That’s a huge resurgence in faith in only half a year.  I bring this up only to point out that BlackBerry isn’t getting any free passes from Wall Street.   The stock is higher, expectations are higher, and management comments will be evaluated against those expectations.  So don’t be surprised if something disappoints the market.  Something always does.

As for Q4 earnings, here’s what the Street expects: 

  • Revenue of $2.83 billion. Most of the revenue comes from hardware, and analysts think the company sold 7.1 million devices in the quarter.  BlackBerry 10 is expected to account for 1.0 million of this, although estimates range from 0.4 million (Pacific Crest) to 2.0 million (TD Securities and National Bank Financial, both out of Canada). 
  • Earnings per share of ($0.31).  That’s negative (hence the parentheses) for finance newbies.  Remember most people expect BlackBerry to lose money because 1) The Z10 came with marketing expenses (which will rise); 2) They are ramping up manufacturing on the platform, and there are usually expenses associated with smoothing out the manufacturing process; 3) Sales of BB7 devices is declining.
  • Average selling price of $247. This is a company average, including BB7 and BB10 hardware.  Specifically on BB10, analysts expect an ASP of $506.  That said, there is a wide range here.  Some guys are still expecting $400 while others are at $550.  I think anyone modeling $400 is asleep at the switch.
  • Guidance for Q1.  Next quarter is a potential biggie for BlackBerry, as they will have globally launched the Z10 and seen the benefit of a full quarter of availability in most markets (and 2 months of availability in the US).  Analysts are expecting the company to post $3.26 billion in revenue and ($0.11) in EPS, so any guidance that deviates much from there will effect the stock price.

My thinking

I think we can expect Thorsten to speak congruently about the strength of the Z10 launch in Canada, the UK, and other markets.  Most analysts - even the bears - agree that outside of the US things are going quite well.  He will probably talk about how many users are migrating from other platforms to BlackBerry, which is something they weren’t anticipating.  This stuff is undeniably positive. 

Will they talk about how many Z10s actually shipped?  I’m not sure.  There is no hard and fast rule here.  I think they SHOULD talk about it, but they may have reasons for not wanting to disclose things quite yet.  The fact of the matter is they’ll have to release hardware revenue and they always give shipment volume, so calculating ASP is just simple mathematics.  If they don’t break down Z10 shipments analysts will be forced to guess based on the ASP this quarter vs last quarter (pretty easy math to do, but not that accurate because it depends so much on knowing the actual Z10 ASP)

The stock is higher, expectations are higher and management comments will be evaluated against those expectations

Will they talk about the US launch?  Who knows.  Again, I think they need to strongly address the negative comments that have been floating around all week.  Why does it seem like AT&T was so poorly prepared to handle the launch (training, signage, demos, etc)?

Oh, and FYI, I’ve heard from a good source that the other major US operator will be conducting a very big TV ad campaign next month.  If that turns out to be true, it can only help.

What about service revenue?  I have been writing about the risks of significantly declining service revenue for a while now.  I stopped writing about it because it’s become obvious that this will indeed happen.  Some readers hated seeing me talk about this, often accusing me of going overboard.  Obviously I had real reasons for expecting this decline, and now it’s accepted as common knowledge.  So the question is ... just how quickly will the decline happen?

Analysts understand that we’re potentially trading service revenue for hardware revenue.  And on the income statement it looks much better to have the immediate (and larger) hardware revenue.  Especially since the Z10 looks like it has a great gross margin.  But service revenue is recurring.  It’s viewed as stable and safe.  All of this leads to a lot of potential stock price volatility.  BlackBerry may drive earnings up sharply on the transition to BlackBerry 10 hardware revenue.  But if the industry continues to apply steep pressure to device pricing (and margin), then this profitability will be short lived. 

At least that’s the scenario that analysts have to consider. 

Anyway, that’s my take.  We’ll be live blogging the call and I’ll write up my thoughts on the results afterwards.  If you have questions or want to disagree with me in the comments, feel free.  I’ll be reading them.  

Topics: BBRY Editorial

Reader comments

Are we heading into a Good Friday for BlackBerry?


How are the above two comments any different than a "first" comment? Yes I'm now also guilty I but felt the need to point that out.

I think analysts will have to have factored in the service revenue decline back in December. Remember that huge oh-oh panic attack? It was totally unnecessary. Service revenues will fall because consumers wanted RIM to fit into the model other smartphone manufacturers were following. Also, the model RIM was using was beginning to lose much of its value anyway. Data rates were declining and Apple was still able to sell a smartphone that was a data hog. People would pay and ignore data rate premiums because of content Apple was putting out there. Suddenly reliable communications was considered secondary to content. The perceived value of RIM's data centers was diminishing.

Actually, RIM's data centers still has a great deal of value, as their push messaging service is still second to none by a long shot. They should leverage that for more exclusive RIM services.

And to be clear, they usually give both!

For example, last quarter they shipped 6.9 million phones (announced in the press release) and sold through 8.4 million (announced in the Q&A part of the call).

Several sites, including Engadget have tried to spin the ship number negatively by pointing out that devices are probably sitting on the shelves gathering dust ... and it's clear they didn't actually listen to the call.

I do expect the ship number to be higher than sold by virtue of the carrier ramp up of BlackBerry 10, but I've been wrong before.

You nailed it. If they don't release what they've sold (they tried this smoke & mirror tactic with the Playbook), the media will have a field day.

Yeh but someone will likely get crucified, don't want to wish anyone bad but it looks like the shorts will hear some surprise upside statements causing a squeeze

Well I just hope blackberry doesnt get crucified this friday, the rest of the weekend is quite a slog to pull of the entire resurrection thing

One other thing I think the street will be looking at is the cash on hand. If it is anything below $2B then they will not like that. I think that if it is below $2B then it had to be spent on marketing, if not then it is a bad sign and expect the stock to go down

Samsung spent $440M last year on marketing, which is more than Apple spent. BBRY had almost $3B as of the last report, so a drop of almost $1B due to marketing would be unlikely. They have dropped hints that the cash position will be good, and I doubt they would consider a 1/3 drop 'good'

I love reading these break downs of yours. I'm on college here in Nova Scotia for business and im finding as time in my accounting class goes on I'm understanding more and more.

Posted via CB10

History has shown that any bad or suspect news will be blown out of proportion and the share price will fall. Sad but true my friends. I expect this to happen!

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If Thorsten is planning an interview with CNBC with Melissa Lee in the afternoon, my gut feeling tells me they will surprise the market with positive news. It's another matter that the bears and short sellers will try to put a negative spin on the results and the outlook. This is just the start, the short sellers will not give up so easily.

On AT&T recording, the caller is greeted with the news of the IPhone 5 while waiting to speak to a customer rep. That summarizes what most have been saying, the carriers will only push to sell those phones that are popular and visible on the streets. It's a long fight to gain traction with consumers.. BB might have better chance with corporate customers. Still hoping that they get a far chance to succeed..

I agree on it should be positive if they moved up the conference call to the morning and that he has an interview in the afternoon. Let's just hope that's the way WallStreet and the media sees it. I'm rooting for BlackBerry all the way. I get my White Zee 10 from Verizon, so it should be a great day all around.

"the carriers will only push to sell those phones that are popular and visible on the streets"

What about when they have millions of dollars of inventory sitting in their warehouses because they over estimated sales?

Do you think carriers might push that product?

Carriers rule the market. Not Apple. Not Samsung. They push what makes them money. And why wouldn't they?

79% of AT&T's handset sales last Q were iPhones. Is anyone REALLY surprised that they aren't pushing BlackBerry? 4 out of 5 handsets is very disproportionate to Apple's US market share which means they aren't pushing Android or Windows Phone either.

With expectations this low, BlackBerry will/should beat market estimates for a good Thursday and Friday, BUT the market and media WILL want to know how many devices sold period (because of AAPL and "Sammy" always announcing theirs and that's who they compare us (BlackBerry) too). If we don't say how much were sold, they will assume and make-up false numbers and try to kill off BlackBerry (us) in the US. If BlackBerry doesn't annouce it, they will have to be clever in how they present things to Wall Street and media outlets. After AT&T dropping the ball and continuing too, and T-Mobile now following suit with limited to no marketing, both the media and WallStreet are expecting bad news. Fingers crossed and hoping for the best!

BB is obligated to disclose how many devices were sold in Q4, and for how much. Shareholders are entitled to this information not just morally, but legally. It's material evidence of how well (or poorly) the company is doing.

I'd be absolutely thrilled to see a figure of 2mm Z10s sold in Q4; don't know how reasonable that is, but it would be cool. Would also be uber-cool to see them beat that earnings estimate.

Sold to whom? Retailers? Carriers? End consumers?

BB has different agreements. They might have shipped to carriers and the carriers only pay BB once he device is sold. Or they actually sell devices shipment against money. Then it's hard to track if customers actually bought them. Blackberry could disclose activations of Z10 if they so wish, which would be a device in consumer hands.

This is wrong.  They can decide not to disclose BB10 sales metrics if they deem it competitively important to hold back that info for the time being.  Note that (today) they DID disclose the sales numbers, but no ASP.  They are not under legal obligation to reveal ASP.  Notice Apple doesn't reveal it?  Companies have a lot of leeway in defining what is material information that must be disclosed to investors.   

Hey, Chris. Thanks for the analysis. I'm expecting the stock to remain volatile regardless of what happens with the call.
I'm just looking for the positive signs tomorrow because we know everyone will beat any negatives, no matter how small, to death.
The sun may rise slowly...but it will rise.


BlackBerry will be crucified in the financial markets. Resurrection is not a foregone conclusion come Monday.

Posted via CB10 from the BlackBerry Z10

Hey Chris, you mentioned ASP of 540. Just curious how this number is possible if ATT is selling at retail for $550. I understand carriers take a loss for discounted contract phones, but $540 ASP means ATT is only making $10 gross on full retail.

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I see the iphone 5 16 GB is $649...I had always read that Apple received $660 per iphone 5 from carriers so there must be something in the monthly fees, though this is a bit odd.

I mentioned an ASP of $550 not $540. When a carrier sells off contract it is still locked to the carrier's network and most people don't unlock, so the carrier can sell the phone at cost, or even sometimes slightly below cost knowing that they'll make money on month to month service revenue. The best example of this is USB modems in the UK market. Sold dirt cheap, below cost, knowing people would pay for data access (which they did).

I hope BlackBerry execs will read this string of messages tonight and take from it some of these ideas and use them when they release the results

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If you read the article you'd know that the earnings report is tomorrow morning prior to market open.

WSJ and AllThingsD are reporting it incorrectly too. Hard to take their advice seriously if they can't even fact-check a published time

On the service revenues. Is Balckberry getting a cut off Blackberry World stuff? I'm thinking over time more game, video, music purchases because the new phones can just consume those services better.

I wish BlackBerry well, I do. Having said this, I will also say that I'm genuinely concerned about the company's prospects - word on the US streets is that the Z10 has suffered disappointing sales.

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Fingers crossed on this one. I'd say this is arguably the most important earnings report for BlackBerry in 2+ years. BlackBerry 10 actually launched despite many believing the day would never come. And given that, this report will give us an idea of whether this great new QNX OS is something that others are adapting more than just us CrackBerry faithful. We're behind you BlackBerry!

I'm waiting for the Q1 of 2013 results! BB10 just hit the States and am really curious to see the numbers...

Fiscal Q1-2013 has already been reported. That was the call where the launch delay for Calendar Q1-2013 was announced. BBRY is way outta whack in their bookkeeping timeline. I would love it if Chris could give us an origin story on how it got so far off.

You have to put that in perspective. BlackBerry is a worldwide company, spending billions and making billions. That much money swings both ways.

If they "didn't expect folks to come from iOS and Android" they don't read this blog and it's forums as much as they say they do. There were plenty of expats from previous BB devices who had migrated away and just wanted Z10 to be competitive to bring them back into the fold. Smacks a bit of "I'm shocked to find out there is gambling going on here in this establishment..."

Got my options ready for the earnings call tomorrow. Fingers crossed for good news.. Lets get some upside $bbry

This says it all (comment from stocktwits by user BlueLion):

BlueLion Mar. 27 at 4:12 PM
$BBRY if u r a CEO and u just had a lousy quarter w/o any hope of future, would u schedule a TV appearance to talk about your company?

Thorsten BTW scheduled an appearance on CNBC for the afternoon tomorrow.

You cant leave a bad quarter out there and let the press define it as they will. You have to try and refocus the message. There may be more reasons to be out after bad earnings - good earnings speak for themselves.

great post Chris always aweosme to read, I'm hoping for a great friday ... my call however is if this is a big part of taking ios and anroid users it better than the service revenue because that wont convert people over. I'm hoping to see a good take on how many people have picked up a Z10 in place of an ios or android device.

Let's all hope for a good Friday. But we are still looking at partial results from the past. If things are any better now, then at the next call there is a sharp increase then I can't imagine things showing up to be much better. The next quarter results should really show something. I'm really itching to see those but sadly
"the waiting is the harder part"

On the service revenues I am on Rogers, got a Z10 but am still on my previous blackberry plan so they are still getting their service revenues from my plan

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The metric I'm looking for a reaction to is 'subscribers' given that BBRY is changing how it calculates this value.

I sure hope bb makes a comeback. Ive been reading bb articles everyday and jus seems like a lack of enthusiasm n interests from the public... Ive been using the z10 in canada almost 2 months n i love love love it! But when i tell my buddies how great the experience is, they either dont care or r waiting for the s4. Shame shame shame if this is over for blackberry :(

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I don't own any BBRY shares or any shares for that matter, but I always find myself reading your posts. They are extremely well written and very informative. Thank you.

If we get waaay better than expected results tomorrow, Top Developers will start considering making applications for BB10 and start announcing their apps in a month or 2 max! The subscriber number will be a big one also, ESPECIALLY if we got back to 80 millions users or even higher!

Nice drop to pick up some more shares, then a major uptick on Monday with Verizon throwing down they are sold out of BlackBerry devices.

Not too concerned with the short-term, I'm still a firm believer that BBRY is a long-term play that should find a stable share price around the mid $20s. IMO the stock has a little too much positive attention right now and is due for a price hit as short-term players start selling off after a relatively lukewarm (if not 'cool') launch* in the US.

*that's a prediction too, still way too early to measure anything

I saw an article from Zacks that talks about sales in the Gulf slowing but says "the company has received good pre-orders for the phone and are working with its two distributers in the Gulf region to keep pace with the demand. However, one of the two distributors has sold only 300,000 Z10 phones since its launch". Isn't 300,000 units sold since Feb 10 by one Gulf distributer pretty good?

BBRY long till it hits at least 100$.

All analysts are focused now on just the Z10 but seem to forget that the Q10 and 4 more devices are coming out this year already.

And then the money they can make with their MDM solution. Companies need to pay 100$ a year for iOS and Android and 50$ a year for BlackBerry devices. 3500+ enterprises are now testing BES10 and MDM solution if blackberry. Even if only 20% of these companies decide to use it it will be hundreds of millions income for BlackBerry.

And then there is QNX, there is so much possible with QNX that I am sure they will find a way to create steady income from that.

In a few years from now BlackBerry will be a very healthy company again and the stock price will be MUCH higher than it is now.


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I hope it's a great call tomorrow, too many great people worked way to hard for far tooo long making an amazing product not to have some good news

Swiped On My Zed10 Via CB10

I understand the financials will be released at 7am EST, then the conference call is at 8am EST. So an hour to digest the numbers before the call, and 90 minutes to listen to Thorsten explain/pump/defend/gloat the numbers whilst the pre-market trading jump starts the action and sets the gap that we'll see when the market opens. Depending on what you're rooting for, it will be either a good start or a bad start to a long trading day. Maybe they'll let Thorsten ring the opening bell - is he still in NYC?
I think volumes will be at least 3x if not 10x normal. If there's a short squeeze, it will be insane. Potential to trip some circuit breakers on too much movement.
Then again, maybe nothing will happen. I thought today we might see some nervous shorts break and push the stock up a bit near closing time. A bit of extra volume in the last 10 minutes, but nothing extraordinary.

I expect that Thor will have some "good news" announcement on the call. Something he has kept in his pocket. I also think the numbers will be pretty good, as I read between the lines a bit, I think he has hinted at it as much as he legally can. If I look at comments over a period of time, it is the impression I get. Chris probably has a better grip on how a CEO communicates subtly without stepping in it. Except for Jamie Diamon (sp) who pretty much wings it.

Once again, thanks Chris, nice work.


I think this is a fair and comprehensive summary of what is to come tomorrow. I'm sure you're much closer to being right with your analysis.

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Looking forward to additional commentary on:

- The plans for service revenue moving forward?
- What happens with the PlayBook now given the WiFi units seem to be mostly sold out?
- What is the cash situation like, following all the ramp up expenses!
- How has the subscriber base held up globally?

Good news or bad... Thor needs to sell his enthusiasm on the BB10. Challenge CNBC hosts for negative comments. Sell the positives and bring positive energy in the message. For the last interview after earnings, Google "thorstein heins cnbc" and click on the video for Dec 21, 2012.

All the best to Thor and his message! He is doing a great job!

Yeah, their ditzy reporter said that she thought the Z10 was "counter-intuitive". Obviously she hadn't used it very long

I believe it will be a good Friday, but I am more worry about next week as the shorters will try to do anything to get the stock down and you know they are pretty powerful and have more than one trick in theirs bags.

Thanks Chris. Anybody other than traders and bears should sleep well tonight. The true boom or bust for BlackBerry won't be realized for at least 3 more earnings reports imho. I'm in Waterloo and i have hope that my neighbours can regain the lead in quality products and continue to innovate. All the best to the company tmw regardless of what happens.

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What has always been odd with analysts, Chris included, is that they talked about the service revenue and how it was destined to disappear for years and then when it finally happens, they talk about the tragedy of the service revenue disappearing. It's why the analysts have always been humourous to me. They rarely know what is happening unless given guidance by companies (shown by the wild shipment swings and complete loss as to what BlackBerry will report tomorrow) yet will still spin their views as if they were correct all along.

But here, with the service revenue being lost, they were correct and now act as if this was something surprising. BlackBerry is trying to change their service revenue to getting MDM revenue as well as moving into banking and other transaction handling revenue, yet on and on about the death of BIS/BES fees. It's a bit much to lament this inevitability.

I agree on the lamentation, however, my long standing challenge to BB is at what point do they sit down and engage shareholders in a conversation on BB's future, including these new income streams?

Have they ever announced how much of their income originates from QNX? It has a substantial presence in numerous industries, especially automotive.

I don't day trade anymore, but it I did my strategy would be to go in with a short position and hedge with call options.

Judging by the level of short interest and the amount of calls purchased, I'm not the only one with this strategy. Close the short and profit from the calls.

I predict bbry will break out tomorrow on any sign of turn around. BB10 platform is a winner.

Posted via CB10

Well I hope for good news tomorrow but not so much to drive up the stock price but to keep morale in BlackBerry high so the energy stays there through the whole year. If that happens I think the company will be in much better shape at year end as will be the stock.

Posted via CB10

Thanks for touching on service revenue issue. That seems to be a big cause for concern when it comes to long term profitability. I'm keeping my fingers crossed that bis keeps rocking around the world

You're stating the obvious. BB10 doesn't need BIS and neither does the PlayBook. Nothing sad about it. It reflects a re-invention of the company and its priorities. What worked great in 1999-2009 does not apply as much today. People will pay $90 for a 2GB dataplan. People value content more than efficiency and security. It doesn't mean you cannot do both, and I certainly hope RIM continues to put security at the forefront. It's good for business and security/privacy conscious consumers.

I wouldn't get my hopes built up for outstanding news. My guess is it will be around the median of bears and bulls.

The Z10 was released only for the whole of February in the UK, and in Canada for most of February.

That's a total market size of under 100 million with perhaps 50% with smartphones - and the UK in particular is experiencing low growth. To sell 2 million devices BlackBerry would need 4% of the market to buy a new phone in a single - quiet - month. Not very likely.

Around 1 million sold would be highly respectable and definitely a success.

BlackBerry is on the road to recovery but that recovery will take several years. My guess is the price will take off in the fall when the premium devices are launched in time for the main buying season.

I hope it's 5 million BlackBerry Z10s sold (in February). Perhaps they sold another 4 million BB7 devices as well. With the Q10 arriving next month, the next quarter will be much better since RIM will have two BB10 devices, especially the long awaited Q10. I can see a lot of diehard Bold users switching over the first week, including Mr. Schmidt (Google CEO). You've got to love his gutsy, non-apologetic attitude!

Remember ..... they will calculate " shipped " devices.
Carriers would have had to received a week in advance .... maybe sooner.


I will make a bold statement but I think BB is out of the woods from a financial perspective . No doubt it will take a number of quarters to brings sales and revenue up but the Z10 and BES10 are long term winners. The Z10 is a wonderful device and nice change from Android and iOS which have simply stagnated. Let the shorts do what ever they do as they are engaged in a sophisticated form of gambling.

I don't believe the markets will change that much in regards to BB share price or over all view. Saying that i believe the next quarter, will be the true game changer and the Q10 with Skype coming with bolster sales.

I know this is a little off topic, but did you know that wild sloths can't jump. This directly relates to the earnings call because, actually it doesn't have anything to do with it. I'd bet that if a sloth needed to check email or download an app, it would use a Z10. So there's that.

Things that I remember Thor saying during the quarter:

"We had our biggest single order of 1,000,000 BlackBerry Z10 from an existing partner"
"Canada sold 50% more Z10 then any other BlackBerry phone in it's first day of sales"
"UK had its best launch day for BlackBerry Z10 then any other BlackBerry smartphone in history"
"We will report a good cash position"
"We had to ramp up production"
"I am liking the Z10 a bit more then the Q10"
"We have received excellent reviews from our carrier partners"

Any more?

The old management used to say "amazing" things too before an earnings call. "Our new products will leap-frog the competition", for example. Thor said a lot of good things. He absolutely HAS TO back them up now. The media will ATTACK if he falls short of his own rhetoric.

Just got my Z10 and I have to say it's the kind of product which promotes insomnia. I give them less than 24 months to reach 200 a share IMHO.

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Am really excited about the numbers, though I think the q10 is going to be the best selling blackberry ever, the z10 is a wonderful device but I see a lot of old blackberry users waiting for the q10. I hope numbers will either keep the stock stable( with volatility of just 5 % haha) though with blackberry, anything is possible. We might see a 20% drop or 15% raise. You never know.

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