Byron Capital analyst Tom Astle attended the mobile industry’s largest gathering, Mobile World Congress, in Barcelona this week, and offered some thoughts on Blackberry’s enterprise business and presence in emerging markets -two key footholds for the Waterloo-based company that is continuing the rollout of its anticipated BlackBerry 10 devices.
Astle says Samsung Knox, an offering that is now available on Galaxy S III and Galaxy Note II devices, is clearly targeting BlackBerry’s enterprise base. Knox, which involves more than a few ex-RIM employees incidentally, lets clients divide their phone into two halves; one for business, the other for personal use. Sound familiar? It should. That’s exactly the idea behind BlackBerry Balance, a feature of the new BlackBerry 10 devices.
Samsung’s offering, which integrates technology from Fixmo, another RIM alum company, doesn’t convince Astle that RIM’s enterprise business is in peril, as he believes IT departments will be hesitant to adopt Android.
On Monday, BlackBerry launched in India, and Astle says the company’s foothold in emerging markets has not gone unnoticed by competitors such as Nokia, Huawei and ZTE, who plan to offer handsets to those regions priced under $100.
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Some eyebrows were raised this week at the pricing of BlackBerry 10 handsets in India, which are reported to be selling for approximately 45,000 Indian Rupees, or more than $800 US Dollars. In a report to clients earlier this month, Astle broke down where he expects BlackBerry sales to come from this year.
The Byron analyst said that of BlackBerry’s 79-million subscribers, about 45-million are in emerging markets. He expects that just 15% of these users will upgrade in 2013, for a total of seven-million units. Astle thinks BlackBerry will release a lower-end handset late in the year, and RIM will have a decided advantage over its competitors because its BlackBerry Messenger (BBM) has proved that it runs robustly on 2G and weak networks.
Astle, who has a BUY rating and $18 target on BlackBerry, is modeling 23-million BlackBerrys sold this year, rising to 31-million in fiscal 2015, but says the company could just as easily sell 40-million. His base case model gives him $1.60 in EPS in fiscal 2015, and his price target is based on 11x this number.