Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) or Blackberry shares soared over 20% since Monday morning. Part of the rise was due to a report on Wednesday that someone had purchased one million phones. On Monday shares jumped on reports of a possible deal with Lenovo. Some more good news for Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) investors.
Jefferies is now reporting that their channel checks indicate that the Z10 is sold out in many new markets with channel partners scrambling for supply. India has been particularly strong. Also, AT&T Inc. (NYSE:T) will launch the Z10 on 3/22 with substantial subsidies. And Jefferies believes that AT&T will heavily support BES10 with it possibly becoming AT&T’s preferred MDM partner across all channels. Jefferies reports have been in stark contrast to other channel checks by research firms. Below is the latest from Jefferies.
Z10 continues to sell well
Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) noted that ahead of the Z10 launch in India on Feb 25 that it increased its internal sales forecast for India by 40% due to the strong Z10 sales in other regions. CEO Thorsten Heins recently noted, “I was surprised when we launched in India how well the Z10, which is a high-end device, sold. Jefferies shipped into the channel product that we thought would have been good for at least five days and I got an emergency call from our manager in India, saying that they were sold out in two days. Now we are scrambling to re-load that channel.”
AT&T Inc. (NYSE:T) sets March 22 as date of Z10 launch
Jefferies believes that the launch will assuage any concerns of slippage in the launch schedule. Additionally, the Z10 will be priced at $199, which is consistent with other high-end devices such as the iPhone 5. Carriers are paying Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) ~$600 per phone, which points to the high level of subsidies and carrier support the Z10 is receiving.
Lenovo Buyout Unlikely
Jefferies sees a Lenovo Group Limited (ADR) (PINK:LNVGY) acquisition as unlikely. Following an article in deal Reporter of a potential acquisition by Lenovo, they reiterate their view that this is unlikely. They believe a full acquisition is unlikely due to U.S. security concerns and Lenovo taking over Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB)’s hardware business would face similar pushback. It is more likely that Lenovo and Blackberry are in talks to form an alliance or JV where they co-develop some products for Lenovo to sell through its corporate channels, similar to what Lenovo did with EMC.
Not just about the phone
While the Z10 is not central to Jefferies’ buy thesis, there is continued steady demand in the UK as well as over 50 carriers and in 21 countries now launched. They see upside to consensus Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) estimates and highlight the huge MDM opportunity for BBRY.
Consistent with previous U.K. and Canada checks
Jefferies initial checks in the UK at Carphone Warehouse, O2, Vodafone, Orange, and EE that indicated widespread and robust demand., followed by additional UK checks of 85 stores after the initial weekend of sales which showed continued solid demand. The firm conducted checks with 50 stores in Canada that also showed solid demand. And last week they physically checked six stores in London and Edinburgh on recent marketing trip for signs of excess inventory or wavering Z10 demand. Jefferies found neither. All of the stores they visited had only a few devices in stock and sell-through appeared fine.
