Analyst Reactions Before Research In Motion Ltd (BBRY)’s Q1 2014 Earnings

Heins expects “single digit percentage decline” in service revenues. Service revenues came in at $964 million last quarter, down 2%. BlackBerry CFO Brian Biduka expects the company to post solid gross margins this May quarter. Gross margins will be driven by stronger hardware margins and cost improvements, which will offset the gradual decline in BlackBerry’s service revenues.

BlackBerry has focused on developing integrated service offerings such as Research In Motion Ltd (NASDAQ:BBRY) Messenger (BBM) to battle declining service revenues. BBM, a messaging application, will be available as a free download on Apple iOS and Android-based devices this summer. The company will monetize BBM through BBM Money and BBM Channels. Some analysts remain skeptical. If BlackBerry allows iPhone and Android users access to BBM, it may decrease the need to own a BlackBerry phone. However, allowing BBM services on various phones will increase exposure and maximize revenues.

Short Interest

NASDAQ data shows 182.6-million shares of BlackBerry are sold short as of June 14 against 494 million shares in the public float—an increase from 171.3 million shares as of May 31. The average number of days to cover increased from 9.3 to 9.4 days.

Source: Short Analytics (click image for bigger picture)

If Research In Motion Ltd (NASDAQ:BBRY) beats estimates with impressive earnings, the stock price may soar to new month highs. Short sellers will be cornered and forced to liquidate their positions. If it’s known short sellers are covering their short positions, especially from institutions or hedge funds, the stock may propel higher, break out above overhead resistance levels with high volume and reach its 52-week high of $18.32 a share. If estimates come in below expectations, the company’s stock price will fill with uncertainty and risk and shares may drop to new month lows. BlackBerry shares may reach the $13.30 support level and trend lower to $12.85 with added short-selling pressure.

The article Piecing Together Analyst Reactions Before BlackBerry’s Q1 2014 Earnings Results originally appeared on Fool.com.

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