Latest report from Bluefin supports a bullish stance on BlackBerry

Bullish on the Q10
By Chris Umiastowski on 8 May 2013 06:17 am EDT
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So far this week we’ve seen some negative comments out of the usual bearish Wall Street analysts.  If you follow the stock, you know who these guys are. They tend to avoid any kind of balanced analysis, always hammering on whatever negative points they can find.

Wall Street analysts are not typically experts on how to gather supply chain data, nor are they experts in how to measure sell through at retail locations. There are experts out there who gather such data for a living, and they sell it to people willing to pay for it. So whenever I see Wall Street doing store checks and the information conflicts with dozens upon dozens of anecdotal reports, I get suspicious. And when it conflicts with many public statements by company executives, you know someone is wrong.

Bluefin is a non-traditional equity research firm that specializes in doing the kinds of channel checks that investors are interested in. They probably don’t have nearly as detailed financial models, they won’t necessarily know as much about the company’s long term strategic plans, and in the case of BlackBerry they’re unlikely to talk much about things like BES 10 deployment, for example. But they usually have better knowledge than most of Wall Street when it comes to supply chain stuff.

This means BlackBerry underestimated demand for the Q10, and now makes three times as many Q10 devices as Z10.

Bluefin put out a report yesterday that essentially tells their clients that BlackBerry is set to deliver more than 20 million BlackBerry 10 devices this fiscal year, and that would be significantly higher than most analyst estimates. 

They suggest that Z10 sales have slowed since the launch, which seems normal considering demand is always greatest in the first few weeks, and we’ve also seen the Galaxy S4 and HTC One launches since then.  But they also tell us that carrier inventory is certainly not an issue - carriers are holding next to nothing.

Furthermore, Bluefin confirms what we wrote about earlier this week.  Specifically, that Q10 production has now shifted to a 3:1 ratio of Z10 production levels, which they say is up from a prior production ratio of 1.5:1

This means BlackBerry underestimated demand for the Q10, and now makes three times as many Q10 devices as Z10. This, ladies and gentlemen, is the single most important data point driving financial results over the next couple of quarters.

As Bluefin puts it, “We still see the BBRY supply chain forecasting units above Wall Street consensus even after the Z10 and Q10 launches, with the mid-range R10 handset likely coming in CQ3 and a high-end phablet by the end of the year.”

Topics: BBRY Editorial

Reader comments

Latest report from Bluefin supports a bullish stance on BlackBerry

87 Comments

I KNOW. Seriously. Still working on it this morning. I keep trying to make more decisions for myself which I prefer. It's really, really hard. 

Hopefully today. It's coming! Have a couple other stories I want to get up too. 

Me too. Although by your hesitation, I'm guessing it boils down to what you use most, keyboard or screen real estate. I REALLY want to hear about battery life; this will be the deciding factor for me. Does the q10 smash the z10 to bits? If not, then z10 it is for me...

EXACTLY!! I have Z10 and only reason for me to switch is a lot better BATTERY LIFE... I trust Kevin and I am sure he will writte what we need to know and its going to help us..:)

lol he just looks tired. The guy has been campaigning across North America almost non stop the past few months.

Maybe because he is as sick as Me and other $BBRY investors of the sell side analysts constant uninformed nonsense masquerading as informed research?

Way to go BlackBerry! Whilst I have and love the Z10 I am glad the Q10 is selling well. Hope this means will will indeed see exciting things from BlackBerry in the near future. : )

Posted via CB10 using my awesome BB Z10

Thanks Chris, your articles are always good.

As BlackBerry fanboys would it help to buy as many BlackBerry shares as we could safely afford to tip the scale ? If BlackBerry did the same with some of the money their sitting on shouldn't it lessen the impact of the people who are just trying to hurt BlackBerry?

I was going to buy a q10 to go with my z10 thinking that would be support ( and i get something too lol) but I would be willing to buy my first stocks if it helps

Posted via CB10

Even if 1000 fans each bought 1000 shares you'd cumulatively own 0.2% of the company. So no, it wouldn't matter.

Buy the products as a fan and invest based on strong companies not products.

Posted via CB10

Excellent article!

Especially considering yesterday's bearish report about production being reduced by BlackBerry and that carriers have not replenished stock. Citing garbage about predicted supply chain reduction, leading to assessment of lower demand this year causing the stock to drop 4% yesterday.

Can blog entries such as this around the community help the stock or influence these bearish analyst firms to look deeper?

Posted via CB10

$7.81B (market capital) / $14.90 per share = approx. 524 million shares (max. deviation of approx. ± 2 million shares)

1 million shares would indeed barely make a dent

Great news, so I am just assuming that BBRY is now producing 500,000+ Z10's and 1, 500, 000+ Q10's a month....?

The business analysis on CrackBerry is fascinating. I wonder, though, whether the reason why carriers are holding few Z10s is because they used middle-men like BrightStar to reduce risk?

I love my Z10, but I'm surprised by the number of legacy BlackBerry users in my life who weren't tempted into upgrading. And, frankly, given what I've seen of the way retail treated the Z10 launch in the U.S., it's almost impossible to believe anyone who wasn't already heavily favoring the device and persistent would end up leaving a store with one....

I'm hoping the Q10s will tempt legacy BlackBerry users in the U.S. to upgrade. If not, then I'm afraid that the bulk of remaining U.S. BlackBerry users stayed with BlackBerry during the dark years not out of brand loyalty or preference, but just because they don't care much for the idea of buying a new phone no matter how awesome it is. When they eventually need to, I'm not as sure that they won't try a different platform as I once was...

I'm a 9780 owner (and have had nothing but BB devices since 2001) and would love nothing better than to upgrade to the Z10 or Q10..but it's a work-paid phone and it's locked in to a contract for another year, so without paying a giant penalty I'm stuck. My wife just got a 9900 2 weeks ago from her office (days before the Q10 release)..but it was here office's choice. Many business just haven't made the switch, they tend to shy away from "leading edge" to stick with a lower risk established device.
Most of us and businesses are slow to change..only upgrading when times rolls around.
My feeling is that the phase 1 strategy for BBRY was to stop the bleeding (2013). Prior to BB10 I probably would have upgraded to a non-BB phone next time around. Now that BB10 is here I'll be happy to stay with what I love and not have to sacrifice with a stale BB7 OS. Phase 2 once even more popular apps are available and the BB10 devices have replaced more and more BB7 stock, BBRY will market more heavily against non-BB users, doesn't make sense to do it yet, there are still important things missing, whether it's the must-have app or bugs and features people expect.
People are switching back to BB10 now are likely previous BB users that had switched to another platform.
It's a great start for BBRY, but it will take time to ramp up from how low they had been...it's not going to be a 40% market share over night!
-9780, PB32, PB64

I agree that companies are slow to move and that is the right move. At my company, we have introduced 5-only z10 for testing, while the rest are remaining on the older devices. Testing has gone very well, but a full change over will not occur until we see the Q10 and the other devices so we can select the right devices for the right reasons. As I type on my Z10, I am curious if returning to the Q10 physical keys will suit my business needs better. I feel you won't see massive corporate shifts for at least 1 year. It mainly is individuals that have made the purchases. This phone is awesome, a great corporate device, and it is now a matter of time.

Posted via CB10

Exactly my thoughts. There are obviously people coming back from Iphone and android to BlackBerry. But there is also a lot of bad sentiment from current BlackBerry users that were stuck with crappy BlackBerry phones. These people are curious about the other platforms and are not willing to give BlackBerry another chance. I think they are wrong of course but I see it happening with the people close to me. In any case I think this is normal and BlackBerry should focus on expanding their technology qnx further and further. The obvious place to start is the car. Nfc pairing everywhere. Loving my Z10 really curious about Q10!!!

Posted via CB10

"But there is also a lot of bad sentiment from current BlackBerry users that were stuck with crappy BlackBerry phones."

Spot on. BlackBerry has unfortunately left a bad impression behind with many users. People has left for iOS/Android and are happy now. Even though they could see BB10 as a nice platform, they see no reason to switch back.

IMHO, BlackBerry survived several years due to this "latency" and now they suffer from the same.

Furthermore BB10 is still suffering from having a significant smaller number of apps (approx 1/5) and market share (maybe 1/8 at the moment), so BB10 will mostly be concidered number 3 or 4 platform for 3rd parties to develop for.

BlackBerry has learned their lesson and will have to fight hard for a long time in order to regain market share. As a partner of BlackBerry I would love to see them succeed and I think the new management team has executed very well, so I keep my fingers crossed.

Chris, maybe stupid question, but why you dont edit your articles on yahoo finance..?
They are an awesome and I think more people should read them...

I have never investigated what it takes to have Yahoo publish these. Would make a great source of additional traffic for CB though.

Posted via CB10

Exactly! I would love to read your thoughts there!!!
And I have to ask you:) do you go for Q10 or keeping just Z10..?:)

Come on! Chris cant writte there because 85% "Analysts" from there are *** u know what I mean..;)

Btw.Pre market looking good so far..

I also wondered why you don't post these wonderful articles on Seeking Alpha. It is very easy to become a Seeking Alpha contributor. Just click on the link below an article to get started. When you publish an article in seeking alpha it automatically get pulled in by many financial sites including yahoo finance and marketwatch. Hope you try this for this article. Excellent article.

Thats right Chris, just do it!
And show them your valueable articles..! A lot people has SeekingAlpha app!

Chris would make all the other analysts seem terrible because he actually does thorough research ;)

CB10- BlackBerry Z10

I think the big question all of us want answered is how long is it going to take to 'flush out ' the BB shorts? 6 months? 1 year? 2 years?

Posted via CB10

Awesome. That means big things coming up for BlackBerry.

Also is it bad that when I saw bluefin I instantly thought of the tuna? Haha

Posted via CB10 - FINALLY

Hi Chris,
Is the 20 million unit number for Q and Z10 or does it also include R10 and plan let shipments? Thanks

Also, looking at what PAC Crest said regardless production cuts -- the 1-1.25 million per month sell thru the last 2 months was just Z10 while the production levels they cited today of 1.5-2million was both Z and Q. Doesn't seem like an apples to apples comparison. I would assume blackberry does not have the leverage to put additional supplies with carriers or retailers given their mkt share. Thanks

Posted via CB10

The issue seems to be the estimate of Z10 sales. Are they good or not? Of they are good then this is great news, if they are not good then the Q10 stiff is less impressive.

Frankly I'm shocked at how bad the ads are in the US. They are old Blackberry style showing nothing of what the phone can do and instead focusing on cool visuals that have zero to do so the phone. That was ok when the phone was not competitive but is unacceptable given that it is.

An ad that says BlackBerry has flick typing and peak tells people that the phones don't have apps. Sure it may not have as many apps as rivals but it has apps, tell people that because they don't know it.

Posted via CB10

Kiddo2050 hit the nail right on the head. They need to create a campaign that tugs on the heartstrings.

Posted via CB10

Great article. Chris what I don't understand is how come large institutional investors believe the crap that is written by some of these so called analysts. I could understand the average retailer believing this negative spin on things.

Posted via CB10

They believe cause they are lazy hence the job of sitting behind a desk making money with someone else's money ;)

Posted via CB10

Brilliant article. Anyone who doesn't follow Chris' blog should do so - loads of interesting reads.

13 million is good enough, and a more realistic fiscal year estimate. And z10 will sell more than Q10.

From a keyboard BlackBerry user since 950.

MS

Too many opportunities for the negative analysis to jump on. All these new products coming out one after another just gives them another chance to beat down the stock.8% here 5% there, and it never ends.There will be 4 more devices due, before the year is over ,and thus 4 more chances to beat it down again.Apple on the other hand come out once a year with a new product.I know BB10 is new and it might have to be done that way, but what a roller coaster ride! 1 step forward 2 steps back!!

I just dont understand why people doesnt learn and they are over reacting almost every single week!:(

There is still a massive short position on blackberry, and I think some of these brokers and analysts will get caught swimming naked when the tide goes out. This position needs to unwind so get used to hearing lots of 'one day' bad stories so that these guys can exit their position. BlackBerry shares won't take off until this short position is gone. I personally have been long blackberry for a year.

Posted via CB10

couldn't it also mean that the Z10 has slowed down so much that the ratio has been skewed to 3:1 now?

The phone is just one piece of this puzzle, another missing piece to all the expert analysis out there is the influence of qnx on BlackBerry. I believe that Dan Dodge said they equipped 11 million cars with qnx software last year and growing. The key is growth, and if there is a connectivity gap between the car and phone then blackberry seems to be in a position to grow that side of the business, but yet again there is not a peep from anyone regarding this. Not even executives who could easily shine some positive light on the company and allow shareholders some breathing room. If what Dan dodge said is true and 11 million vehicles have qnx software, where is the money generating by this, at $10 a car that's huge.

Chris if you want to set yourself apart from all the bone headed , brain dead, drooling, can't put a spoon in their mouths, idiots who claim to be experts then uncover the truth, and write about it. Seems to be so apparent and yet it hasnt been touched on.

These bashers and so-called analysts are obvious front-people for short sellers and other vested interests. These manipulators who are so greedy that they will break laws and destroy companies and hurt their constituents. They don't care, if they get caught, they pay a fine, which is a small portion of what they get illegally. They are never sent to jail so what you got to lose. If you are not caught, great, and if you are, still great. Now, thats a good crime business to be in. Of course they make our system unstable, so what, they made their ill-gotten fortunes.
I am hoping against hope that Blackberry announces some strategic partner or a deal that squeezes these shorts by a price increase to $40 or even $50 in a moment. Then they get no chance to cover and will pay a huge price for attacking Blackberry.

What does this mean for the future of the Z10? Will BlackBerry support full touchscreen devices in the future?

Posted via CB10

Yes, they will.

All this means is that all people saying "the keyboard is dead" got it very, very wrong.

So this is telling me I bought the "playbook" or "Storm" of the bb10 phones when I picked up the z10. If BlackBerry doesn't sell a ton of an item they tend to drop support quickly. Great

Chris,

Consider reaching out to Bloomberg and Reuters as well please!!

If I recall you previously had been featured on Bloomberg now?

Posted via CB10

bullish, bullish, bullish, I love the Z10 whatever they say out there. I wish the R-series will have a full touch screen to attract the young ones and those who want to spent less on mobile phones. BlackBerry should be pushing for the full touch screen style, like the Z10 than pushing too much for the keyboard style. Teenagers and even some adult don't want to be seen with keyboard style of phone. "Some call it old fashion". The keyboard is good for business folks, even then some rather want the Z10 look. We are good with the software part - BB10 which is powerful. Let's move forward with the hardware part.

The best way to support BlackBerry is showing everyone else that BlackBerry has changed and it is back with a new and Amazing handset.

Posted via CB10

"But they also tell us that carrier inventory is certainly not an issue - carriers are holding next to nothing."

Are they referring to the Z10? Have they done a check of numerous retail outlets? Blanket assumptions like that with no proof should be disregarded.

I don't know if it's such a good idea for BlackBerry to continue in the tablet market unless they can come up with something truly unique. They now have two high quality smart phones and a lot of potential in their QNX subsidiary, but with the maxi-pad and Android tablets being so dominant, it will be even a tougher uphill battle for BlackBerry.

Posted via CB10

So tell me WHY this didn't affect the stock price anywhere near as much as a bs story about BlackBerry "Maybe" being in trouble.

Posted via CB10

Day after day, weeks after weeks, months after months I gained confidence. I stopped counting... are we closer from two years than one since Thorsten headed BlackBerry? Probably.
We had the "Q1" delay, the "DOA" rant, the doom and gloom flood, the rumors, the "you fanatics only sugarcoat things and can't get real".
In the meantime, some of us were showing support, by any mean we found appropriate or simply affordable. This included help in forums, collecting news and spread the word on social networks, get our hands in the coal, fight against an army of (paid? ) naysayers.
We were in front of the most incredible challenge of the tech era, yes, compare it to apple, can't find more relevant

You'll still find some able to forecast dark, painful, gloomy and failures for BlackBerry. They did for years.
Others will ask for the full monthy, the perfect shot, the zero fault, the tsunamistic lineups...

I'm a golfer. And I've been driving over 300 meters many years before I got a sad shoulder wound... but never got my 1 digit handicap. As we, golfers, use to say "driving for the show, putting for the dough". And I've just seen the most accurate short game ever.

I believe some will understand what kind of cross blog - forum bridge I'm setting right now. If you don't, please just forgive me. If you do, you'll understand I prefer to do so here, away from what I think is intellectual masturbation.

BlackBerry is back. Like it or not, they're back in the game. Perfect? They're not: who is?

Posted via CB10

I,m a golfer too ,but nowhere close to you!Apart from your golfing skills,you sound like you are another one of those Crackberry Freaks.Don't take it bad ,my hats off to you and BB loves you too!!!!

I am increasingly worried about Blackberry shares for the following reasons:

1) Handset margins will continue to decline; Apple can compete on ecosystem, Samsung has scale. Blackberry has neither.

2) Heins originally thought the Z10 would outsell the Q10 (said as much on analyst call). Numbers seem to be reversed...suggests the Z10 cannot crack the touchscreen market.

3) Market potential is still small as lots of their 70MM subs (emerging markets) will not upgrade

4) Samsung in the DoD?! Did not expect that.

5) GOOG is working on glasses and cars. AAPL may have a watch and a TV. Yet Heins says he has the mobile computing platform...? Net, net - new revenue streams are years away.

6) BBRY needs partners in this gun fight....to date, they have none.

7) Clevland research suggests BES10 penetration rates are low due to fierce competition.

The high short interest and Q10 sales will provide a floor in the short term, but I am worried about the December 2013 earnings call.

Damn John, thanks for much for your comment dog, you have given me pause for thought re BBRY, I guess BBRY has brought a knife to a gun fight......Heins doesn't have a clue what he's doing.....nore the people investing their hard earned cash into BBRY on the sharemarket.....yup, Heins must be flogging a dead horse......riiiiiight John??

John, you raise some very good points. Z10 sales seem to have really tailed off in the UK as well at Carphone Warehouse. I worry that Thorsten blows a lot of hot air, calling Apple stagnant, tablets dead, and claiming the Q10 will sell several tens of millions of units...no evidence to support such claims. And as you note above, they have 70mm plus subs but only ~20mm enterprise subs...even if half upgraded, that would be 10mm q10s over time. if this goes tits up, Thorsten still walks away with a $10-$12mm severance package he negotiated up front, while shareholders get screwed. I notice not one BB executive has purchased any shares with their own capital.

I don't think it is actually true that they underestimated demand for q10 so much as they simply need to ramp up volumes as more countries and carriers launch the q10, a switch-over from just making the z10 in volume was inevitable at this time.

I bought the Z10 the first day it came to Nigeria. And all the updates, presently at os 10.0.10.99, it has achieved much stability. But the point I'm trying to make now is that much is not being done to market the Z10 and Q10 in Nigeria, which is predominantly a blackberry country when it comes to the use of smartphones. BlackBerry needs to do more in this area.

I'm looking forward to BBM going to android so I can leave blackberry for good, I have the Z10 and want a Samsung SG4 bad.

Posted via CB10