Wednesday afternoon, Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) issued a press release stating a “partner” placed an order for one million BB10 devices, with shipments beginning immediately. The release states it “marks the largest ever single purchase order in BlackBerry’s history.”
Is Verizon the Buyer?
Morgan Stanley is out with a report today about that order. They believe the partner is Verizon Communications Inc. (NYSE:VZ), and that the order likely includes both Z10 and Q10 devices. While Verizon announced it plans to begin shipping the Z10 March 28th, their checks indicate Q10 shipments won’t begin until late May, implying that the order likely spans more than one quarter.
There is further evidence this morning that indeed the buyer is Verizon. On Thursday morning, Verizon started pre-orders for the Blackberry Z10. The z10 is costs $200 with a new, two-year contract.
Morgan Stanley believes that Verizon likely received an ~8-10% discount on the bulk purchase, possibly the carriers’ motivation for signing the volume commitment. The analysts believe the ASP on the Z10 is in the ~$475-525 range, implying an ASP for Verizon of ~$430-480. In addition, they suspect that inventory levels of Blackberries may have dipped low at Verizon Communications Inc. (NYSE:VZ) over the past few quarters as many carriers freed up shelf space ahead of the BB10 launch.
Morgan calculates that the order implies Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) 10 devices could account for ~7% share of Verizon Communications Inc. (NYSE:VZ)’s quarterly smartphone unit sales, assuming the 1M order is spread over 2 quarters, as Verizon sells ~7-8M smartphones per quarter. With headlines of stockouts followed by early price discounting followed by takeouts followed by denials of such takeouts, Morgan still thinks that Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) stock remains hostage to the latest news story and datapoint to hit the market, making true fundamental investment decisions challenging.