BlackBerry Stock Talk: What’s expected from this week’s quarterly results?

Santa Stock Market
By Chris Umiastowski on 18 Dec 2012 10:33 am EST
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For many years I looked forward to Research In Motion's late December quarterly results. They'd almost always outperform expectations so it was like an early Christmas present to sit there listening to the joy.

The last couple of years haven't been quite as fun to watch. This Thursday, December 20th, RIM will report its latest set of financial results. Will we get an early Christmas present? We shall see.

For the quarter to be reported, the consensus estimate is shipments of 7.2 million devices with an average selling price of $215 (slightly down from last quarter). Analysts think RIM will add just 0.4 million subscribers (compared to 2 million last quarter). I'm not going to worry too much about those numbers because they reflect the ghost of BlackBerry Past, not the future under BlackBerry 10. But, last quarter the market was surprised at the resilience of the brand in the emerging markets, and the 2 million subscriber number was quite strong. So can they do it again?

More important, as always, will be the outlook for next quarter. This will be the first time we listen to a conference call from RIM knowing that the BlackBerry 10 release is actually coming in the current quarter. So we should get a lot of commentary from management about what's coming. That said, and as we discussed on the latest podcast, I think RIM needs to surprise the heck out of the market on January 30th, so I'm not holding my breath for too much disclosure.

Here's an interesting number to keep in mind though - $227. That's the average selling price (ASP) analysts think RIM will achieve in the year ending February 2014. As a crucial reminder, ASP is what RIM charges carriers for phones, and is NOT the same as the subsidized or off-contract price. Obviously BlackBerry 10 will have a way higher ASP (I think closer to $550), so depending on the mix shift over the next year, this is where RIM has a lot of potential earnings leverage.

Mixed in with this, we have the risk of falling service revenue. CEO Thorsten Heins and Brian Bidulka (the company's CFO) have often commented about the pressure RIM is facing with service revenue. As a shareholder, I just hope we're talking about a long, slow decline thaht can be offset by new service revenue growth coming from things like converting the BES business to a SaaS model, or machine to machine (M2M) computing.

If BlackBerry 10 sales get off to a good start it will boost the company's ASPs faster than analysts expect. This will help profitability, and could contribute much faster than any drop in service revenue. If this happens, I think the stock will keep climbing next year.

The Crack team will be live blogging the results as usual, so be there after the market closes next Thursday!

Image Credit 

51 comments

sk8er_tor

BB10 sales will get off to a great start!

TomJasper

I predict north of $14 Friday. ;)

Disclaimer: I'm not a qualified broker, do your own research. :)

NinjaB

all due respect, but that's not a hard prediction seeing as they were just at $14 yesterday...

as long as results aren't negative (less than expected), the market will treat that as positive news and the stock will continue to climb IMO...

whitbags

Fingers crossed. The subscriber number is going to be interesting, that's for sure.

morganplus8

There are a few milestones that need to be mentioned here, one is sell-though as they clear out inventory. They have tracked 10.5 and 10.4 in the first two quarters of fiscal 2013. I hope they continue to track close to those numbers for this quarter. Secondly, cash on hand is important, not so much that they need to hang onto it as they also need to produce enough new products and advertise their way to stardom so cash on hand will be important in that respect. Finally, the BB 10 launch, it must continue to get the juices flowing and so far they are doing a heck of a job at that! I also want them to get pre-orders out there across more carriers. I'm waiting to pre-order mine and can't. Finally, RIM needs to get the focus back on BB 10 and away from YOY comparisons with last years numbers, who really cares about them??? The media does, and they will be all over the drops in comparitive numbers.

BBThemes

i dont get the whole pre-order thing.
ordering (and putting a deposit down more to it) a device which you dont know the (full) spec of, or its full capabilites kinda doesnt make sense to me. then add that no on or off contract pricing has been given by anyone just makes it even weirder.

I get that the pre-orders on rogers right now are refundable and such, but at the end of the day your giving them your money to hold for 44 days minimum, so they get lots of interest from the cash and you dont.

hmmalex

The known specs were enough to get me to preorder.

I guess I could buy a few more RIM shares with my $40, otherwise it will be sitting in the bank making less than pennies over the next 44 days.

BBThemes

you`d prob make more money that way, and yes its only a few of your pennies, but add everyones up and it`ll soon get to a reasonable ammount for having to do nothing other than make a pre order page lol.

Ryked

I don't know what it is going to cost my billing cycle is the 10th. We normally get the bill by the 14th or so and it is not due until the 7th of Feb. So I should have the device prior to paying the $40.

:)

Joy1980

I think it is more to gauge the demand of the device so that they can manage supply better. As much as we believe that it will be a successful launch, they do not want to order more than necessary or they do not want to turn anyone away if they order too little. Remember what Kevin went through trying to track down a Lumia 920.

BBThemes

gauge demand? how would you do that? as i said, no 100% specs, no 100% price, no 100% date. every single logical arguement says nobody should go for that.

Im not trying to be negative, just realistic, it doesnt make any sense, and for that reason you simply cant judge demand.

bungaboy

I guess one must consider what one's time is worth to put things into perspective.

I consider my time to be worth a certain dollar value, therefore, I refuse to stand in line to purchase anything.

If I can pre-order and have the phone ready for pickup and operation I would prefer to do that. That is much more cost effective for me personally.

BBThemes

oh i completely agreee that pre ordering a device makes sense from a time situation, obviously as long as delivery beats in store stocks.

and yes, i`ll happily pre-order, but not until i know what im getting. im not about to pre-order something (well, i cant by me anyways) that i have no idea what it will cost me. granted us on this site know for the most part the abilities and look of the L series, but id never put my name down for a financial agreement without cold hard numbers.

As soon as my carrier offers pre-orders WITH a pricing structure, then i`ll be all over it like a cheap suit, but until that point i cant. and lets be fair, if apple put a pre-order up now for the iphone5s with no specs or price, we`d be saying EXACTLY the same thing.

a1s2d3f4g5

. Nice post chris. Nailed all the important factors. The cash position will also be something to take a look at.

TomJasper

Chris, in regards to SRG, I suspect this is being addressed with "value added" BBM rollout/s. One avenue I look forward to is BBM Money, little talked about but imho large growth possibilities, which again ties in well to BBM value added rollout/s. The synergy is there, waiting to be exploited. :)

TomJasper

" or machine to machine (M2M) computing"

Some interesting patents filed in that regard. ;)

feldmen01

It sucks that we will all be dead before we see BB10...

panterarck

Sorry to hear that you'll be gone in two months. I will for sure see BB10 so that sucks for you!!!!! I don't buy into that mayan nonsense.

Rootbrian

The world was supposively supposed to end 20 times. But that never ever even happened. BUSTED!!!

Fear mongerers will continue to fleece people, but us reality free thinkers and smart knowledgeable people won't fall for it.

Poodwahr

I weep for RIM and what could have been.

simu31

I danse with joy for RIM and what SHALL BE!

Si.

simu31

I'm SO sorry, I had a typo... but it's still better than you being a troll

Si.

Rootbrian

Llort.
TROLOLO0L0L0L0L0L0LLOLOOLOL lol

advil_yum

I'm hoping for a bomb and the stock drops $3 or $4 (or more!). Only because I dragged my feet in buying south of $10, and regret it... lol
I've never invested on the stock market and don't know much about it, but I've long wanted to own RIM stock.. back in 1999 before they "made it" when the stocks were $3 or less they were the Buzz of Waterloo. My Dad had some and got nervous when they hit ~$10, so sold... kicked himself a few months later when they went to $35, then really kicked himself in 2008!

Rootbrian

They won't be dropping. They can only SOAR!!!

TomJasper

re:Dec.21.2012,the Mayan's never predicted the destruction of the Earth on this day, instead they said great change would happen on this day.

Behold BB10 :)

BBThemes

they also didnt have leap years, so their calendar isnt the same as the current one.

either way though, BB10 doesnt come out on dec 21st, so kinda makes no sense lol.

Snipperdo17

How do you know they didn't account for leap years ;)

BBThemes

well if the date the mayans set was 21st dec, and leap years were introduced after the mayans, id of thought that was self evident they couldnt account for it otherwise they`d ave implemented leap years themselves lol

TomJasper

BBThemes, does so come out on the 21st,lol.

Alas, is was but a metaphor mine brother in arms. ;)

G-bone

I'm digging your metaphor, brother!

drummer_god

12 month calanders did not exist back then.

experts have decided the day the mayan's calander ends is what we NOW refer to as dec.21,2012.

whether the mayan calander ending signals the end of the world or not is up to interpretation.

some say, it means the return of the creators of mankind; the Anunnaki, as the mayans counted down until the return of their gods.

some say, it is just the end of a calander that was not replaced because the spanish came and took over.

who knows.

kupfernigk

Leap years are just an artefact of the Roman calendar and are completely irrelevant. The Hebrew calendar has leap months.

Ebscer

As long as the change in subscribers is positive, then everything will be ok...

jechow

Does anyone know if they have anything left to writedown? I am not trying to be funny but have they written down all of their Playbook inventory?

I can see RIMM management taking a bath this quarter so that they can report fanastic quarters subsequently.

POView

one guess is buyers will emerge on a Quarter release sell off...

Made in flanders

I don't think they'll have 7,2 million devices sold.

Bold_until_Hybrid_Comes

As long as worldwide userbase hasn't gone down atleast we still have that as our excuse. "Its only in north america!"

MoolahMitch

I am waiting to hear more on where they are with their CORE program aimed at cutting costs.

Mr.Conviviality

my money is on a sell off, post call... we'll see what happens Friday morning.

simu31

Then you're about to lose your money.

Why would they possibly sell 40 days before their biggest launch? It doesn't add up. After, when the company is worth more because of "better than expected" sales of BB10 devices, but before is a rediculous idea.

Si.

BBThemes

i wanna know how much of their share buyback they were able to sort while stock was below $8, as that would have benifited them greatly to get the stock back while it was at a lower price

DuexNoir

I'm not at all in financials/business but I'll be watching...on the edge of my seat.

~I am BlackBerry by choice~

simu31

I'm wondering where all of the "it's going to be a bloodbath" people are. They were shouting as loud as possible before the last quarterly results and (frankly) looked stupid shortly after the results were announced.

I'm not expecting anything great from the numbers, but as long as they haven't dropped in subscriber numbers and haven't burned any (or much of) their 2.3bn cash reserves, then were all go for BB10 launch on January 30th.

Si.

THBW

A sensible reply. In my view, the June quarterly results, along with announcements of restructuring and the BB10 delay was the watershed moment for RIM. They got all the bad news out and have been building a positive trend since this point. I expect a continuation of this trend on Thursday. Then the fun begins.

BBInPlay

I agree. They got all the bad news that day and Thor took it on the chin. I was actually pleased that day as I was pretty sure they were clearing the deck for the new management group and bb10 to move forward.

I am not so sure about tomorrow especially cash. Don't see it as a problem but I think they might miss the analyst mark on this one. Very difficult to keep gaining cash from inventory etc.

Probably do well on other markets especially subscriptions. I suspect they have continued their momentum in emerging markets.

pacman84

So, wouldn't it be a good idea to wait until the stock price falls after the result's call, buy when the stock price is actually low and then just wait until end of January or even longer and sell? Because as I see it, the stock will likely only go further up, even after a possible little dent by thursday, right?
-pac

Jimcmf

A few things I was thinking:

1) I believe that RIMM sold some Nortel Patients to Apple, so that Apple can fight Samsung harder. Would this not add cash to RIMMs Bank account

2) I hear the over seas, BB sales have been pretty strong. This should help flow through.

3) BB10 has had some VERY positive feedback so far. I haven't hard nothing negative.

The upside is much more then the downside.

You be the judge.

Rootbrian

Not into the stocks or the markets, but I'm hoping for positive news. :)

GO GO RIMM!!