Research In Motion Ltd (BBRY) Q10 Carries High Hopes: NBF

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Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) sold one million BlackBerry Z10 devices in the fourth quarter, which was in line with Wall Street expectations.  Sales of Z10 in the United States began in late March, and the company launched its Q10 device in the U.K. and Canada in early May, which will definitely help Research In Motion Ltd boost its sales in the first quarter. Earlier checks suggested that Q10 is selling like hot cakes in the United Kingdom.

Research In Motion Ltd (BBRY) Q10 Carries High Hopes: NBF

The National Bank Financial said in its latest research report that it expects the Canadian smartphone maker to sell 4 million BB10 devices and 4.2 million BB7 devices in the first quarter. BlackBerry Q10 has interestingly been priced at a premium. NBF analysts believe that premium pricing indicates that the company is targeting corporate users with the device. During an interview with Bloomberg, Research In Motion Ltd. CEO Thorsten Heins said that Q10 is a high quality product for people who want to get the job done. He expressed confidence that the device will sell tens of millions of units.

Moreover, Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) recently announced the launch of a Q5 device, which is expected to hit the Asian and Latin American markets in July. With Q5, the company will be targeting entry-level customers in the emerging markets. It has 3.1-inch screen, 1.2 GHz CPU, 8GB internal memory and lower performance camera. The device will face stiff competition from Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s Asha line and Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930)’s low-priced Android device Rex. The success of Rex and Asha will put pressure on the gross margins of Q5, says NBF analyst Auritro Kundu.

Analysts said that another big headache for Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) is that it is still missing several paid and free apps. BlackBerry World has about 120K apps, compared to 850K of Apple Inc. (NASDAQ:AAPL) App Store and 800K of Google Inc (NASDAQ:GOOG) Play Store. National Bank Financial has a sell rating on the stock with a $10 price target.

Views of Raymond James on Research In Motion Ltd (BBRY)

Raymond James maintains its market perform rating on the stock. Raymond James analysts believe that the substantial improvement in sell-in of Z10, Q10 and Q5 globally will help the company report better EPS than many analysts fear. But the analysts remain cautious in the long-term as decline in the Services revenue stream remains uncertain.

In the worst case scenario there could be little Mobile Device Management (MDM) success with non-BB devices. Analysts expect the Services revenues to decline by 40 percent over the next five years before it stabilizes. They expect Services revenues to plunge 13 percent in FY14 to $3.4 billion, and another 19 percent in FY15 to $2.7 billion. However Raymond James believes that BES has become a standard for security and device management. As Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) has a strong presence in the enterprise market, it could become a strong contender in MDM. Analysts said that if Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) occupies 20 percent market share in MDM (exceeding SAP Afaria’s 16 percent), and that Services revenues will start growing again in FY2017.

Ex-Hedge Fund Analyst Bashes Sell-side Analysts on Poor Market Checks

Former hedge fund manager Michael Collins bashed the sell-side analysts for using poor and unreliable methods to create their “store check” reports. He mainly targeted Brian Modoff, the telecom analyst at Deutsche Bank. Collins brings up several points that demonstrate that even the top-tier Wall Street checks can be dreadful.

Collins questioned why Brian Modoff conducted half of his U.K. store checks for BlackBerry Q10 at the Everything Everywhere chain even before the device was made widely available on this retail chain. Moreover, Modoff didn’t conduct checks at Phone4U and Carphone Warehouse, the two most important smartphone sellers in the U.K. That’s not all, Modoff conducted checks at Q2 stores, and not at Vodafone which is the strongest partner of Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) in the country.

Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) shares were down 0.62 percent to $14.39 at 2 PM EDT.

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