Research In Motion Ltd (NASDAQ:BBRY) will surprise when it announces its results for June, predicts Ryan Jacobson in his article published in SeekingAlpha.
Research In Motion Ltd (NASDAQ:BBRY) is set to announce its results in less than a month.
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Research In Motion Ltd (BBRY)’s June Forecasting:
While arriving at the sales figures, Ryan predicts Research In Motion Ltd (NASDAQ:BBRY)’s BlackBerry Z10 would clock 1 million units each month. He feels Z10 has outsold the Nokia Lumia series, though by a small margin. As regards Q10 is concerned, Ryan feels 1.5 million units as a reasonable number to achieve. This is on the back of Q10 selling over 1 million units in Canada and the U.K. Besides, the suppliers in the U.S. have ordered another 500,000 units to cater to pre-orders from T-Mobile USA (NYSE:TMUS) and Verizon Communications, Inc. (NYSE:VZ).
Research In Motion Ltd (NASDAQ:BBRY) posted a service income of $950 million during last quarter. Ryan presumed a 5 percent reduction in service revenue while arriving at the projected sales number. The average price per phone is taken at roughly $228 with $220 for BB7 phones and $600 for BB10 phones. However Ryan Jacobson feels with the older operating system getting faded out, the company could only sell 2.5 million units of BB7.
Thus Ryan projects first quarterly revenue of $4.1575 billion for Research In Motion Ltd (NASDAQ:BBRY) by assuming revenue of $2.7 billion from BB10, $550 million from BB7 sales and another $907.5 million as service revenue.
For arriving at the cost for the first quarter, Ryan has considered the proportionate number reported for the previous quarter. Last quarter, Research In Motion Ltd (NASDAQ:BBRY)’s cost of revenue was roughly 60 percent of its sales. This would translate to a figure of roughly $2.495 billion for the first quarter. However Ryan has factored a 5 percent increase for all other costs over the previous quarter, partially to offset larger costs attributable to BB10 launch. The other costs would thus total $1.1413 billion and the total operating cost is estimated at $3.6358 billion. Ryan has, however factored 35 percent tax rate for this quarter, though Research In Motion Ltd (NASDAQ:BBRY) has not paid taxes during the past 5 quarters,
Ryan thus projects an estimated net income of $339.1 million, after offsetting the sales and cost estimates as above. This would translate to $0.65 EPS for the first quarter of 2014, a significantly higher number than the Wall Street consensus of $0.03 EPS.
Ryan Jacobson thus predicts Research In Motion Ltd (NASDAQ:BBRY) should surprise on the upside when it announces its results next month. He predicts if the company posts results closer to the above estimates, the share price would catapult to the high $20’s, with possible short covering aiding the share price to rise further.
Research In Motion Ltd (NASDAQ:BBRY) closed $13.95 in the pre-market.
Ryan Jacobson thus concludes that Research In Motion Ltd (NASDAQ:BBRY) is certainly emerging as a lean, agile company with focus towards niche market.