More BBRY stock upgrades and downgrades ahead of earnings

By Chris Umiastowski on 19 Jun 2013 04:41 pm EDT

As I mentioned last week, BlackBerry’s earnings report is coming up on June 28th so we’re into what we call “earnings preview” season where analysts pump out reports highlighting expectations for conference call and financial results due out soon. We’ve recently seen upgrades from both SocGen and Wells Fargo.

This week we’ve seen one well known BlackBerry bear cut his estimates and recommendation. Pierre Ferragu at Bernstein dropped his target from $15 to $10 and now rates the stock “underperform” which is the same as a sell rating. I haven’t seen the full report but it cites “very weak BlackBerry 10 traction” and goes on to say, “The initial enthusiasm that we observed for Blackberry 10 devices now appears to be waning."

On the flip side, we have RBC analyst Mark Sue. He has raised his estimates on the back of higher BlackBerry 10 shipment estimates. He thinks they’ll ship 3.5 million Z10 and Q10 units (total, not each), up from his old estimate of 2.75 million units. Sue also predicts BlackBerry will sell 14 million BB10 devices this fiscal year, up from his old 11 million unit forecast.

So who do we believe?  Well it’s not quite as simple as picking sides. RBC’s Sue did not upgrade the stock as many have reported. He just jacked up his numbers a bit, which is not the same as a recommendation (or rating) change. In other words, he’s become slightly more bullish on the stock but we’re talking more shades of grey here, not a massive change in sentiment.

Ferragu is a longtime bear on BlackBerry. That said he did upgrade the stock in February based on the belief that BlackBerry 10 would see a strong launch. So this downgrade is the equivalent of saying, “Hey, I was wrong ...” and it’s not very common to see this happen.

Mark Sue, on the other hand, is an analyst who I believe to be quite solid. He has never grabbed as being overly emotional. Instead, I think he’s got good insight, digs hard, and provides balanced research. His sales estimate of 3.5 million BB10 devices this quarter seems pretty reasonable to me, whereas the SocGen estimate (5 million devices) from last week seems overly aggressive.

We’ll see what else gets published before next week’s big earnings announcement. But at this point I don’t expect too much shock factor. The Q10 and upcoming Q5 are uber important, and we really won’t see their full impact until fiscal Q2 and Q3.

Stay tuned ...

Topics: BBRY Editorial

Reader comments

More BBRY stock upgrades and downgrades ahead of earnings


i hate the fact when people think of BlackBerry, they think of old bb7... that is where and how all these negative comments are being generated. because of that, many think BlackBerry sucks and will never think of buying them again. when people hear BlackBerry they will sometimes ignore it, thus hencing why people do not know bb10 exists. z10 is such a great phone and has an excellent os. whwn i shown my z10 to my isheeps and samsungNerds, they go like " dang its a pretty darn advanced phone i want one and im jealous." they think so because of the no button swipe up gesture to turn on and the keyboard is so cool. i mean you can swipe back to delete a word

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random reboot?

Thanks Chris, we are lucky to have you here on CrackBerry.

Wonder if those of us who intend to buy both the Z and the Q are enough to skew the numbers, relative to how well received BB10 is or sales numbers equaling users? Love my Z10, getting the Q (AT&T) and likely the Aristo, too. Three phones, one user.

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Chris, good that you elaborated a little bit about this downgrade and upgrade. It bother me a lot as a shareholder to read negative news almost everyday.

Well obviously analysts quality vary strongly from one to another so it is not surprising to see "news" fluctuating so much.

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Good or bad, BlackBerry will still be around. They are not gunning for the number one spot

Canadian Z10 owner on Telus

Opinions are like assholes, everyone has one. Rarely do you get ex post facto analysis of who was right and wrong.

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One thing that has surprised me is the lack of talk on BES10. Only Peter Misek has raised it in his analysis it actually is the basis of his buy rating. If enterprise are adopting BES10 then that will translate in a steady adoption of BB10 devices over the next 12-18 months plus if BES10 manages iOS (like Jefferies) and Android then we have addition service revenue offsetting some if not all service revenue loss from BB7 devices. I believe most analyst are looking only at part of BlackBerry business plan and missing a important element in BlackBerry's resurgence.

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This assumes, I think wrongly, that there are all these closed shops still with companies only running "the BlackBerry solution." This isn't 2009 anymore. i.e. just because my global company (128,000 folks in 145 countries) has upgraded to BES 10 doesn't mean anyone around here is buying any more BlackBerry devices than they were 6 mos ago. iOS and Android are still the device of choice by the rank and file.

And BES10's ability to provide cross-platform device management is nice, but far to late out of the gate. Most/all BYOD shops are heavily invested in Good or other iOS/Android device management platforms. They are not going to abandon those because 3 years too late BlackBerry finally has a solution too.

As a shareholder and fan, I must say I'm a bit concerned that BB10 is not going to perform as we all had hoped.

Misek is actually a bear. He states that Blackberry won't be making any smart phones in two years or less, and only selling software and licensing its OS. If he is correct, why would anyone buy a Blackberry if they won't be made in less than one upgrade cycle? I believe Blackberry must have an integrated business plan, that includes hardware, services and software like QNX.....

Analysts who attempt to drive the share price down right before earnings reports time always seems a little fishy to me. What do they really know?

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They aren't trying to drive the price at all with these reports. Their clients want preview reports so they write them. Simple as that, really. Analysts need to be seen writing stuff.

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Right about the analysts.
After the release, I am interested to see how the press (NYT, Wall St J, Barrons, ...) will spin the quarterly report.

As a long term investor, and with all the crap that goes on in the stock market, this a very naive comment.

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I agree with your long term BB position.

With the whole market down 3% and BB down about 1.5%, the time to buy more BB stocks is in near future. This has nothing to do with BB's opportunity for advancement, rather, the whole market is down due to forecast Fed policy. As profits are shown, BB will rise faster than the general market.

I would disagree with that comment Chris. The methodology of those shorting stock call for those tactics. This happens heavily the week(s) right before ERs. You just have to look at NASDAQ chart to see it very clear.

Why you regurgitating what we already know Chris? For an Ex-analyst I have yet to see you give us your insight on ER numbers.

To put things in perspective, Nokia would kill someone if this would give then 14 M Lumias sold in a first year of sales.

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The fact is that RIM/BBRY is in a defenseless no-win predicament in the market place, both, with its product & services lineup as well as with the share price.

Even IF they blow the roof off on Jun 28 with Q1 results, the Bernstein report/downgrade as well as ALL the other bears out there (will) claim that "THEIR" negativity is forwad looking as a predictor of future results.
Quaterly results are backward looking and therefore "ancient history" to anyone interested in buying, thinking of holding or selling the stock.

The Problem lies in the fact that all the stock market bears decide based on red herring indicators like "in-store line-ups" and - like today's downgrade from Bernstein - "google product-name searches."
All the negative reports and downgrades DO get reported in the mainstream media which, in turn, influences normal, everyday consumers to 'buy' or 'not buy' the products.
REGARDLESS of ANY "high praise" or "positive reviews" by geeks and techies who know about and rate them.
Ergo: vicious downward spiral ensues and the 40+/-% stock short-holders make a killing.

The ONLY solution is to keep pushing BBRY to keep improving the Product and Platform, to keep Marketing it "well" and to keep buying it ourselves.

Maybe "one day" (soon??) we too shall overcome.

Cheers and Keep Moving!

Great comment! You should have written the article. Everything you have stated here is 100% accurate. The bears really do have an intent to manipulate. Anyone not believing this needs to get their head examined.

You should get your head examine too if you think that BBRY is still relevant. Selling 3.5 or 5m units is irrelevant compared to the other guys that sell north of 50m units in any given quarter

Analogous to Porsche being irrelevant because Ford sells magnitudes more cars than they do...

You see, your argument holds no ground. Thanks for the comment though. It further establishes the fact that bears have no thesis whatsoever.

Your comment perfectly illustrates mainstream short-seller herd-mentality expectations. 14-24months ago, the shorts predicted that RIM wouldn't survive the year. It did, and the shorts said "Pffft; they'll get dismantled & sold off for parts by the Fall fo 2012; BB10 is just too little, too late."

Then the BB10 release date was confirmed & the shorts said "Pfft, it's gonna be 8 months late."

But it wasn't (OK, so, only 2 months and only in the US) and then the shorts said: "Pfft, but the touch-screen won't sell even a million units; it's ONLY the keyboard BB users want."

But it DID sell, and REAL FAST the shorts floated some hokey research and analyst reports citing "device problems" and "more returns than original sales" ... which were believed by no-one except a few scaredy-cat share holders who sold into weakness and drove the shares down again.
When something hit the fan, those negative comments were quickly replaced by more good news about the impending Q10 launch, 20,000 more new Apps in the store, and a new Q5 device.

"Pffft" said the shorts, "no matter HOW good your news, results and predictions, WE will P*$$ on your parade and keep making $$$ every time the shares take a hit on 'our' bad news."

SO, here is the skinny: LET's - for argument's sake - say that RIM/BBRY reports 50 million devices sold for 2013 ... and THAT would be almost 4 times (400%) the predicted BEST number. Yet, I predict that the "short-sellers" will STILL come back swinging.

Comments like: "sales still weak, because they didn't sell to every one of their 70 million users" AND "now they have no-one left to sell one to" ... you get the idea.

So, first, we'll recognize that 4 million units (predicted analyst consensus #) really isn't a whole lot, esp. in the 20-50+ million/quarter (each!) world of Apple and Samsung. On that point, you were right.

BUT, let's think about something: 12 months ago, RIM was projected to be DEAD by now.
AND, if they hit 5 or even 5.75 million, THAT WILL give us incredible hope. And trigger even more negative predictions and reports.
That will buy more time to further refine the platform, provide fixes & updates, add more functions and apps, etc., etc.
And, despite all the negativity, RIM/BBRY will muddle through as a # 3 or 4 platform/device.

Finally, what's being overlooked by ALL the negatives harping-on about insignficant sales #s is a steady, ongoing stream of contract expirations that have - first - KEPT people from upgrading to BB10 sooner and - NOW - will allow those to happen, going forward.

To illustrate, of my 'just under 2 dozen' friends with legacy BlackBerries and several more with other devices who have expressed an interest in going to BB10 units, NONE OF US are eligible to upgrade our devices (i.e. contract lock) "without penalty" for AT LEAST 6½ more months!!
I'm the first, eligible at the beginning of January, 2014 ... but THAT's about "15-20" Z or Q device upgrades that aren't happening in 2013!!!
Sure, that's not 'millions' but multiply "our" situation by reasonably logical factor across cities & towns worldwide. The numbers WILL come, with time and continued Marketing presence from above.
Patience, grasshopper ... patience.

And positive thinking.

Cheers & Keep Moving!

My Torch 9810 was lost/stolen in May and so I upgraded to a Z10; I wouldn't have been able to upgrade until at least November and still would have had a penalty. Luckily it only cost me $170 for an early upgrade.

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There is nothing here or there or anywhere to change the status of BBRY between $12-$16 pps. I'd buy at $12 or below and sell at $16. BES is not being adopted at any meaningful rate. There was no HA until BES 10.1, and RSA will not produce an app until August at the earliest. Very few large BES will ever go without HA. And fewer still that will go ahead without HA and without a way to push out RSA Tokens. This is not only keeping BES adoption rates down but BB10 adoption rates while increasing market share for other devices.

BB10 devices are great, but the company fundamentals have not changed.

They slashed $1.2B of operating costs from the business. They broke even selling only 1M BB10 phones (they don't make money on BB7 phones). But no, the company's fundamentals have not changed. Nope, not one bit.

There's a graph of mobile vendors in Canada for the last few months, looks like Blackberry is cleaning someone's clock, you'll have to go to "Stats Counter" and look for Top Ten Mobile Vendors. Crackberry won't allow me to post a link for some reason.

BlackBerry sales are very slow. A few spikes when new devices are released don't change anything. That being said bbry doesn't need to compete with apple or android to be a success. As long as they can reverse their losing user base by 19-20m in the next little while they will do just fine

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ha, that's why it's called hedging...some are good and some are bad and in the end, its all speculation until the official is released

Chris, would have liked to see more analysis than you simply regurgitating what analysts have already written about BlackBerry. Thanks.

From my own experience NEC will not make bb10 client for NEC pbx system, Cisco is not working on any vpn client and citrix is not releasing receiver. It is not good when these big boys do bb

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The market still appears to be very bearish on blackberry. Hopefully that mind set will turn, blackberry needs to strive to be in front of Apple and Samsung in terms of innovation

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they aren't trying to drive the share price....right. Just so happens that Bernstein and Faucette release bear reports on the same day right after a big gain.....and it happens over and over again, but no manipulation here......

How about an article that talks about 20 million of Primecap's 25 million shares being loaned to the shorts at the moment? I'm curious as to what they have to do to get those shares back, can they recall them all at once or how would that work?

One zinger will come at the time of the earnings report. As Chis has discussed in other editorials (as I understand) about analysts, there are currently (as I recall) about 45% shorts. This means, these shorts will be released at a loss, to avoid further loses, when it becomes apparent that the company will have positive gains for the year. Then, the press will have a field day to say, "the Blackberry company reported a gain, the stock went down because there is a feeling is ya da ya da" (whatever excuse they can think of).

First of all BBRY shouldn't be an easy subject to Analysts' market-making, but this is a different matter. Analysts do their everyday job, so they can't be always precise or correct. Take into account a fact analysis are being made mainly for Investors (even not 4 long term Stockholders). Investors can make money always, also in case of shares going down. This is 'short selling' - economic condition and sales facts don't matter too much...

[...] and what about future?!

If you are truly long that is you believe in BlackBerry's products and direction then you should ignore shorts...No need to worry about stock manipulation either as ultimately truth will come out on earnings.

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Even though I am long I think BBRY shorts are playing a good role by keeping stock price in check with reality or their understanding of reality.
They constantly point out weakness in BlackBerry's products, marketing, competition and Sales. Keeps management and shareholders on edge.

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Maybe not too little. The US market did not start delivery of Z10 until mid March, and Q10 mid June.
It is too early for the corporates to have started ordering Q10.
Q10 should out sell the Z10 for most of the corporate users.
The real test will be half a year from now.

Thu, Jun 20, 2013, BBRY shares will be a mystery at current prices, seeing double price from here by oct13.
Short sellers want to get out keeping it negated till now.
Wake up investors and ita time put some berry in basket.
Short sellers will try any damn thing to bring the re expected levels of $10.

Cmp $14 apx, recommending for $ 30+ time frame 6-7 months, stop loss $ 9.50.

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Its sad the way these analyst keep doubting blackberry, they are going to move to the #2 mobile OS before the year is out I think.

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These analyst have to understand that blackberry 10 OS has been gaining huge traction. In just 6 months the took 30% market share in Canada, not to mention the huge traction it's gaining internationally. Once the Q10 is launched completely in the U.S, the sales are going to be extraordinary!

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Add my channel C00010BB9 it's all about technology, has over 260 subscribers and over 2000 visits!

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Big investor or company from Uncle Sam cabin eyeing to buy Blackberry. They need to keep the price low. Just that simple.

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BlackBerry needs to really give big chunk of effort in 10.2 to wow its general customers .

The numbers will go up and the word will spread if it can make appearence in general public.

Businessmen wont have time to post on Facebook instagram or other network.

Neither are they gonna spare that time to write reviews.

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Ahhh James Faucette is back on cue. I am not an investor and happy not to be one. If I do it is for the love of the product, clearly not the MO of someone in it for the money. I never really had any idea how sinister it is until I watched the famous video where Jim Cramer talked about how he manipulates the market. If you are naive like me and have not seen that video it is a must watch. Google "Cramer on stock manipulation" and it explains exactly why Faucette and Co. Carefully time their articles the way they do. By the way that's not to say the "long" investors like Misek are any more innocent. It is a very cutthroat world not for the fainthearted. That is why I don't invest. I am long on BBRY only because I love the product and want to support it. If I lose it all, so be it.

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They still haven't given up? Oh well enjoying my Z10 too much to care. I'm still up anyways so meh. I'll check back in a while :)

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I respect when an analyst changes their view when the data has changed or something else to impact their thesis. Bernstein has been pretty correct on BBRY over the last 2-3 years. They were early to go bearish...I remember when this was a $40+ stock and they put a $20 target and people thought Pierre was nuts. Blackberry bulls are pushing a shipment story, while the bears are sell thru story. Look for mgmt not to give much clarity on sell thru rates of the BB10 on the call. I also expect them to say they will not report subscriber numbers anymore which might freak out some people, but ultimately be a good idea.

I struggle to see a big audience for the Q5. Priced in the UK at GBP21/mth...can get an iphone 4 for same price and a litany of other phones at that level.

I'd want the planet finance to reflect - as it was meant to be - somehow the reality, not a crazy $$ game with nothing but underlying cupidity.
At the end of the day, I feel younger (I'm 47) being long; revolutions are on their way, and the more quiet but long running are often those that will mark a decade. It's not a Spike Lee joint.

Yeah, I bought BBRY and I'm long, until the $100 party. A least.

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It is hard to believe that so many people buy iPhone 5s relative to z10s. By daughter bought the iPhone at the same time that I got the z10. She has a case, I don't. Despite this, the anodized surface of the iPhone has scratches off leaving the aluminium surface showing through. It looks terrible. In contrast, I have dropped my z10 and regularly leave it in the same pocket as my keys. Not a scratch. The metal is black all the way through. I have a tiny dent but you can't see it because of the excellent finish.

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The q5 price is correct. All phones need to start at a slightly higher price to increase margins from those that can't wait. The important thing is that the price can drop to attract mass migration from bb7.

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I bought my z10 when it just launch for £529, I couldn't wait! My brother on the other hand was more patient and just picked his up for £250 on ebay! 3 months after launch! I have always used the resale value to judge how satisfied customers are with their device. The fact that the iPhone that launched way before still sells for £350 will tell u more.
BlackBerry did enough to keep the boat sailing with the blackberry 10 and the Z10. What they do next will determine their fate. It's a tough world in the mobile industry. Snooze you loose!
A redesign of the z10 more screen to size ratio. Premium materials...major apps support do or die!

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You have to take these analyst forecasts with a grain of salt. When you're investing your money, you have to do your homework. End of story.

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What price is blackberry now receiving for thé z10? AT&T selling for $499 off contract. UK grocer selling at GBP399 and UK has 20% VAT. Pricing at Orange in Spain well below Samsung, HTC, And xperia.

Bull case assumes $550 pricing on Z and q.

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Given how many people short the stock, they have to be worried that they are paying 9 points to borrow the stock and if they are on margin, the moment BlackBerry does well, they ate soaked. You then wonder why there is some much negative analysis from all the arm chair brokers living in their parents basements.

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Well, lets face it, there was a pent up demand (and escape from legacy devices for some) from BB diehards that should show up in initial Z10 sales. Q10 too early to tell, although again BB kybd loyalists will put some zip into sales out of the gate. Conflicting, at best, channel info makes it hard to read accurately and largely depends on the market they are surveying. If retailers are sitting on a large stock of phones they will dummy up prior to report to not spook sales further. I can't help but think these are both high end devices that will need to
cheapen up to compete with andy-roid and iphony in 3'rd world markets and in a lot of other overseas areas with huge population bases (India/China for example). Cheaper devices in the pipeline will move those sales up in the next two quarters but should have been released early on, not as laggards down the road. I think a transient pps bump on better then expected sales to retailers (not necessarily through sales) but the next 3 quarters will tell the story. Do not underestimate the weight of MSN behind WP's that are starting to take some small increment of market share this last quarter and they have virtually unlimited funds at their disposal. I have an SIII-Z10-Iphone 5 in terms of preference and hardly touch the Iphone anymore. The Z is a close second but gaining as time goes on. Perhaps the next OS release puts it ahead. Q10 just to small screen area. A Z10 slider would be perfect.