RIM announced nothing new when launching BB10 given that most of the pending features and devices had already become public.
Although RIM’s management believes that the upcoming BB10 OS will make the company’s portfolio competitive once again, RIM faces an uphill struggle in terms of gaining smartphone market share. Based upon a detailed assessment of the service business in particular analysts are concerned that as this high margin business erodes the losses in RIM’s hardware business will be revealed.
Q2 Letter: Baupost won big in Q2 with PG&E, eBay, Liberty Global
Seth Klarman's Baupost recorded "strong" gains for the second quarter, although precise numbers were not included in the July 23 letter to investors, which was reviewed by ValueWalk. Klarman said that during the first quarter, they were "substantial purchasers of securities," while during the second, they were "significant net sellers" due to the strong rally. Read More
Why RIM’s BB10 will have minimal impact:
Having already seen a number of delays in the launch of its new smartphone operating system, the company finally announced its new BB10 platform and terminals this week. Analysts from Credit Suisse see a limited ability to gain meaningful traction in the smartphone market and see RIM only shipping 26mn devices over the next four quarters of which 15mn are BB10 based on several factors discussed below. Specifically, the analysts believe that over the next 12 months while the hardware business will see brief renaissance, they believe visibility on this and gross margins are low.
Hardware and Specs:
A glance at Exhibit 2 shows that the new RIM devices boast an array of high quality features. The Z10, which is an all touch screen device, includes a dual core processor 1.5 GHz, an 8 MXP camera and a 4.2 inch screen. At a price point of $599 un-subsidized, analysts highlight that this positions the device at the high end of the smartphone market and with a comparable specs versus some peers including the iPhone 5. The Q10 is a hybrid QWERTY keyboard touch screen device which looks very similar to the BB7 Bold handset. While the company disclosed few features, they noted that the device will have a 3.1 inch touch screen in addition to the physical keyboard.
For BB10, the company noted that the new devices would have been lab tested with 110 carriers globally by the end of February 2013. Note this number was around 50 in Oct 2012. In terms of availability of new BB10 smartphones, the company highlighted the following:
– UK – BlackBerry Z10 will be available from 31st Jan 2013 on both monthly and pre-pay contracts from O2, Vodafone, EE, BT, 3UK, Phones4U and Carphone Warehouse, with price points varying by carriers.
– Canada – BlackBerry Z10 will be available from 5th Feb 2013 and will retail at $150 on a 3-year contract.
– US – The company expects Z10 to become available with most carriers during March 2013. Analysts believe this delay may be because of the prolonged carrier lab testing process. The pricing in the US will be $199 subsidized with a 2-year monthly contract, whereas the unsubsidized price will be $599.
– UAE – Z10 will start shipping on 10th Feb 2013, and pricing will vary by carrier but unsubsidized pricing for Z10 will be around AED 2,599.
Analysts from Credit Suisse lower their FY14/15 EPS estimates to ($0.78)/($1.73) and downgrade Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM) to U/P.