RIMM would need to sell 18m BB10 phones to break even - AAPL, MSFT, NOK, GOOG

Wall-Street analysts foresee a positive market sentiment for the new Blackberry 10 Smartphone devices which are set to launch in March, coming year. The new product will not only bring huge revenues but also help Research in Motion Ltd. (NASDAQ:RIMM) gain market share of the Smartphone market.

Tavis McCourt who rates Research in Motion Ltd. (NASDAQ:RIMM) stocks at “market perform” teamed up with Raymond James for a sensitivity analysis which keeps factors like BB7’s cannibalization under view for a realistic estimate of profit and growth potential that BB10 holds for Research in Motion Ltd. (NASDAQ:RIMM).

According to McCourt’s sensitivity analysis BB10 can score a gross margin of $30 million with a per unit rate of $375 in the year 2014. Service revenues will bring another $3.9 billion while $4.05 million will be incurred on operating costs. The breakeven point with these figures is 18 million units McCourt asserts, saying anything below that will run the company to a net loss position.
McCourt’s analysis predicts a negative gross margin on the existing Blackberry 7 devices due to impact of cannibalizations. The number of BB 7 units sold will go down to 24 million from 31.7 million in the coming year while the price will fall to $180 a unit, he estimates.

For the fiscal year ending February 2013 McCourt estimates the GAAP basis net loss per share at $1.72 which eclipses the Wall street estimate of $1.99 loss a share. His 2014 estimate of $1.31 net loss per share keeping revenues at $12.214 billion is also higher than the $0.45 net loss per share figure in $11.3 billion revenues as per market consensus.

Research in Motion Ltd. (NASDAQ:RIMM) biggest challenge now is to capture market share back from the three forerunners in the Smartphone market Google Inc. (NASDAQ: GOOG) and Apple Inc. (NASDAQ: AAPL) and Samsung. Nokia Corporation (NYSE: NOK)’s development with Microsoft Corp(NASDAQ:MSFT) on its Lumia forefront is also a potential threat that the Blackberry manufacturer will have to watch out for.

The National Bank Financial lifted its target revenue estimate for BB10 from $12 million to $15 million yesterday and the shares of the Ontario based tech concern rose 18% to touch up the record three year high on the Canadian market before settling at $11.6. This was followed by a 14% advance on NASDAQ.

The share price of Research in Motion Ltd. (NASDAQ:RIMM) rose by 13.65% to $11.6 on November 23, 2012. The shares of Nokia Corporation (NYSE:NOK) rose by 7.55% to $3.56. The share price of Apple Inc. (NASDAQ: AAPL) climbed by 1.7% to $571.5,, and. Google Inc. (NASDAQ:GOOG) went down by 0.31% to $665.8.

About the Author

Adam is a staff reporter for US Markets Daily Publications & Media, covering foreign affairs and domestic policy.

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