Optimistic is growing for BlackBerry 10 and analyst recommendations boosts confidence but not everyone agrees

Optimistic is growing for BlackBerry 10 and analyst recommendations boosts confidence but not everyone agrees

Positive Analysts Views

A recent survey of market carriers indicate there is a much more positive view of BlackBerry 10 than was expected. on Tuesday November 20 one of the industry's most influential critics raised his rating of RIM'a stock ahead of the launch of RIM’s do-or-die BlackBerry 10 (BB10) devices.

The more optimistic view of the BB10 launch on 30 January 2013 is solidly rooted in favourable reactions from telecom carriers. Carrier shelf space and marketing support is crucial to RIM's success with BB10. It is highly likely carriers will be promoting and selling BB10 devices more aggressively that was previously expected.

The upgrade by Jefferies & Co analyst Peter Misek pushed RIM’s share price into double digits for the first time in five months, with the stock up more than 3% at US$10.04 in early trading on the Nasdaq.

Jefferies gives it a 20% to 30% probability of success up from a previous 10% to 20% chance of success. An influential analyst (Misek) raised RIM's stock rating from “underperform” to “hold” and doubled his price target to US$10 from US$5.

Misek cautioned that there is still a downside of RIM’s gamble if BB10 fails. The stock could be worth as much as US$43 within the next 12 months if all the stars align for their success. All this discussion is speculative at best.

RIM has to gain back market share from Apple's iPhone and Google's Android devices. The new BlackBerry devices will be faster, a better user experience, and will have a catalog of apps that is growing.

Negative Analysts Views

Pacific Crest analyst James Faucette reinforced an “underperform” rating for RIM’s shares. James said that regardless of BB10's quality, there is almost no chance that BB10 will meaningfully change RIM’s trajectory.

James Faucette believes the opportunity for RIM to raise capital through asset sales may have already past. Inventories of older BlackBerry phones are beginning to disappear. Sales of BlackBerry devices are now flat month-over-month [October 2012] amid sporadic discounting.

Sales of BlackBerry devices in Europe declined month-over-month despite aggressive discounting becuase of aggressive discounting of lower-end Android smartphones. There is fierce competition from winning competitors who are ahead of the curve and are growing, not surviving.

James Faucette sees little hope that BB10 will improve RIM's situation. The factors James feels will contribute to BB10's failure include:

  • A lukewarm response from consumers, at best
  • A new and unfamiliar UI
  • Lack of complementary devices
  • Relatively few applications and what we believe to be a general reticence by app developers to develop for the platform
  • The financial burden of building BB10 devices and the likely increasing pressure on the company’s balance sheet has strained RIM to the limit
  • The time for a sale may likely have already come and gone
  • James does not expect BB10 products to gain meaningful traction outside BlackBerry loyalists

Summary

I think analysts are looking for signs of RIM's success because there is a growing sentiment that the underdog will prevail. Everyone like's to see the underdog survive and turn things around.

Carriers see BB10 as one of their last chances to avoid being locked into a long-term smartphone OS 'duopoly' with Apple's iPhone and Google's Android.

Despite its status as a smartphone pioneer, RIM is often criticized for being left behind in  smartphone innovation.

BlackBerry is still doing well in many markets including Latin America, Asia Pacific, the Middle East, the Caribbean, and Eastern Europe. The UK is showing signs of slippage which is the first sign that their international success might be faltering. This has me very concerned.

It is important to see RIM maintain its internation strength to feel secure about RIM's future. If RIM can hold onto their international strength, RIM should be able to make a sloow and steady comeback in the US and Canada.

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