On Thursday, the technology maker Research In Motion Ltd (NASDAQ:BBRY) announced earnings and finished the session with a slight loss after opening with decent gains. The quarter itself was somewhat confusing and was mixed. Therefore, I am assessing it and determining if Research In Motion Ltd (NASDAQ:BBRY)’s rally has come and gone.
Quick look
The earnings headline read, “BlackBerry Beats but Loses Subscribers.” It was the tale of good and bad, as revenue met, shipments beat, the company swung to a profit, but subscribers fell. There were many opinions for its $2.68 billion quarter with an EPS of $0.22. Therefore, let’s look at some of the more interesting findings from the quarter.
370,000: The best number of the quarter
After the quarter and the conference call, the big news was the 370,000 PlayBook tablets that the company had sold. This number is fantastic and may suggest that the company is seeing an increase in demand. Because after all, for each PlayBook sold, its operating system becomes more attractive to developers and helps to transition consumers to Research In Motion Ltd (NASDAQ:BBRY).
Courtesy: Research In Motion Ltd (NASDAQ:BBRY) Press Info
The only problem is that this was due to heavy discounting in an attempt to move the company’s large inventory. But like I said, the bigger upside may not be in the one-time profits from sales of PlayBook’s but rather long-term consumer transitions and developer interest. Overall, I grade the 370,000 tablets sold as an A- and hope that this signals a continued trend.
One-million Z10s shipped!
In my opinion, one-million Z10s shipped in the quarter is a major accomplishment. This was the company’s version that did not include its famous keyboard, and there is a large belief that many consumers are still awaiting the Q10, which includes a keyboard. The only negative to consider is that the number does not indicate the number of units sold, rather the number of units shipped to carriers and distributors. Although, CEO Thorstein Heins did say specifically that 55% of Z10 buyers have been from other platforms. If this is accurate, then this might be a good indication of long-term success, and that most of its subscribers are awaiting its Q10, very likely scenario.
Investment opportunity
Like I said, there are still too many questions, we don’t know if BB10 will convert new subscribers long-term, if the fall in subscribers will be long-lasting, nor do we know the success of Z10. Of the quarter I was most encouraged with the 370,000 tablets sold, regardless of discounting, because it could lead to relevance in the space. However, as an investment, I am still not ready to buy.
The company’s revenue was down 40% year-over-year, its total Research In Motion Ltd (NASDAQ:BBRY) shipments down 23% year-over-year, and with one million Z10s shipped, I doubt Apple Inc. (NASDAQ:AAPL) or Samsung are missing a beat. In my opinion, Apple Inc. (NASDAQ:AAPL) is still the clear choice. It is seeing 20% growth, pays a good yield, and is trading at just 7.50 times next year’s earnings minus cash. Research In Motion Ltd (NASDAQ:BBRY) is cheaper on a price/sales basis, but has more questions. The good news for BlackBerry longs is that the stock trades with a price/sales of just 0.60. Therefore, it could double in value and it would still be twice as cheap as Apple on a price/sales basis.
Conclusion
My main point in regards to Research In Motion Ltd (NASDAQ:BBRY) is that there are still a lot of questions and that an investment now is speculative. There is a misconception among investors that they have to buy right now or they will miss out on the gains. My point is that if BB10 is successful, which takes time to determine, and the stock rises 100% from this point that it is still much cheaper than the undervalued Apple, meaning more upside would exist. As a result, it might prove wise to be patient and see how the future unfolds before rushing to an investment. The bottom line: You still have time and haven’t lost out on all gains, if BB10 is a success.
The article Determining the Best Way to Play the BB10 After Earnings originally appeared on Fool.com and is written by Brian Nichols.
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