Big BlackBerry Order Bumps the Stock

 | Mar 14, 2013 | 11:53 AM EDT  | Comments
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Yesterday's announcement from BlackBerry (BBRY) that it had received an order for 1 million Z10s sent the stock flying in the last hour of the trading day.

The bears have mocked the news by saying that:

  • It's likely based on preferential pricing.
  • It's likely over a long period of time.
  • The press release was so short that it signals that BlackBerry was desperate for some marketing attention.
  • TechCrunch implied that BlackBerry came out with the release to prop up its stock price.

Here's what I'd say: All's fair in business.

If they got a big order, good for them for sharing that information -- even if it's two weeks before the next earnings report.

Most are expecting a bad quarter. Marketing expenses will ramp up considerably in advance of the Z10 launch. However, only a handful of Z10s will be included in this quarter's results.

Estimize says that BlackBerry will have a loss of $0.29 a share in this quarter, on almost $2.9 billion in revenue. But the big focus on the earnings call at the end of the month will be on next quarter's results.

One wild card to consider here: What if BlackBerry revives forward guidance on the call? The company took it away a few quarters ago because it simply didn't have a product. But now it does, so it should be much easier to provide the Street with guidance, now that it is seeing its order book grow.

The company should provide guidance instead of coming out with vague press releases like the one from yesterday. If it does, that could be a major positive catalyst for the stock, especially if the guidance is healthy.

Wall Street is expecting another $0.14 loss in the May quarter. However, Estimize says that BlackBerry could report a $0.04 gain.

The other thing to watch for either during the March call or later is whether BlackBerry announces several license deals with the likes of Samsung, HTC, LG or Sony (SNE) around the BB10 operating system. Any such deals would be seen as incremental revenue that could more than make up for a loss of BlackBerry's services revenue over the next two years.

There is still a huge disconnect between bulls and bears on where the stock will end this year. The bears believe the stock will go back to $10 or below. The bulls believe it's headed above $20. It will all really hinge on that May quarter that gets reported in June.

If BlackBerry hints at a solid quarter in the March call -- or as the May quarter continues -- the stock could be heading back to the high teens.

Count me among the bulls who see that happening.

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