Research In Motion Ltd (NASDAQ:BBRY) has a new ticker and possibly some new investors. The company just officially changed its name to Blackberry and changed its ticker to Research In Motion Ltd (NASDAQ:BBRY). Shares of the company are surging 13% on their ‘first day’ of trading. However, one day means little for a company. What about the fundamentals for Research In Motion Ltd (NASDAQ:BBRY) (or Blackberry).
Jefferies is out with a new report today, in which they state why they are still bullish on the company. We summarize the key points in the report below:
The analysts from Jefferies initial checks indicate that sales in the UK are off to a strong start. Some stores had lineups out front with widespread sell outs of the White Z10 and limited stock of the Black Z10. Also, checks indicate that pre-orders in the UAE and Canada have had a solid start. While this is not the crux of their call, these initial data points could provide some relief as many thought that the Z10 was DOA.
UK initial checks: The analysts believe that Carphone Warehouse is seeing widespread sell-outs while O2, Vodafone, Orange and EE are seeing robust demand. They estimate sell-in to be at least several hundred thousand units. To put that in perspective, the iPhone had first weekend sales of 5M+ in the U.S. The U.S. is five times larger so continued strong sales could bode very well for Blackberry.
Good start to pre-orders:
Their checks with du, a UAE carrier, indicate that pre-orders have started well. Pre-orders in Canada have also reached tens of thousands based on their checks at Rogers, Bell, and Telus. Combined they believe that could be approaching or above the 100K mark.
Longer services tail than expected.
As businesses adopt BB10, they will have the option to roll off of BBRY’s legacy services plan however, Jefferies analysts think that businesses will use BBRY’s higher-ARPU offering rather than its barebones offering. They believe that ~40% of Research In Motion Ltd (NASDAQ:BBRY)’s current sub base consists of enterprises/SMB. Their scenario analysis assumes 80%, 50%, or 10% of enterprise/ SMB accounts continue paying ~$5 ARPU per month as they adopt BB10 handsets.
Initial sales bode well for the broader launch in March:
The analysts still think Research In Motion Ltd (NASDAQ:BBRY) will miss Feb Q consensus estimates as they expected a March U.S. launch to begin with. For the Feb Q they estimate $2.5B/$(0.42) vs. St $2.9B/$(0.31). But they think that the Street is also too pessimistic in the May Q and estimates $3.2B/$(0.09) vs. their $4.2B/$0.33. They do not think the Street is incorporating the high carrier support (for example $600 ASP and volume commitments) into estimates.