BlackBerry still has a long road ahead. Although, the company been impressing some unlikely tastemakers. Jefferies’ analyst, Peter Misek, was a longstanding bear.
In more recent notes, Misek has been quite bullish on BlackBerry. The tide does seem to be changing as BlackBerry has been able to get back in the black after one quarter of Z10 sales.
However, that doesn’t mean there aren’t still bears on the company. Vlad Deshkovich on Seeking Alpha has devised his key points for a bull versus bear case:
- BlackBerry is in the black. That reason alone is enough to believe that the company is back. Many in the investment world, including myself, doubted that the company could generate a profit. Yet I was proved wrong when BlackBerry generated a post-tax income of $94 million. Although BlackBerry lost revenue from the previous quarter, efficiency programs instituted by the management have allowed it to generate a profit.
- BlackBerry posted a 40% gross margin. This level of profitability is indicative of good administration and an efficient supply chain.
- BlackBerry made a name for itself selling secure phones to large enterprise customers. An order for 1 million BlackBerry Z10′s by Brightstar Corporation, as well as several smaller orders, is proof that there is still demand for BlackBerry units. If BlackBerry can root itself securely in the enterprise market, it will continue to be profitable.
- BlackBerry CEO Thorsten Heins stated that 55% of people who bought a Z10 internationally switched over from different operating systems. The fact that this proportion of people are willing to switch over to BlackBerry 10 means that it is being well marketed and welcomed in various markets.
- The BlackBerry app store has grown to include over 100,000 apps. Apps are the lifeblood of the smartphone industry: BlackBerry’s dedication to improving the quality of the app store will pay off.
- BlackBerry lost 3 million subscribers from the previous quarter. Although the Z10 has been selling well in most markets, BlackBerry’s subscriber base continues to shrink. With fewer subscribers there is less revenue; this trend needs to reverse if BlackBerry wants to be succeed.
- BlackBerry 10 launched well in most markets, but dropped the ball in the most important one of all, the United States. BlackBerry had poor sell-through throughout the States, as well as reportedly receiving improper floor space in carrier’s stores. The United States market is one of the largest and most developed smartphone markets in the world. It is in BlackBerry’s interest to have its new products gain traction domestically.
- As BlackBerry learned before, the phone market is incredibly fast-paced and dynamic. Every day companies pour money into R&D departments to bring about sleeker and more powerful devices. As BlackBerry continues to expand into a larger variety of markets, industry titans Google (GOOG) and Apple (AAPL) are nearby. BlackBerry will need to continue to innovate, as well as enter different segments of the market in order to remain profitable.
Do you feel there is any truth to the bear case? Let us know in the comments as to which side you stand.