Will June 28th Be A Game Changer Or A Whole Lot Of Nothing?

Alexander is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Canadian smartphone maker BlackBerry (NASDAQ: BBRY) is expected to report Q1 earnings on Friday June 28. But the biggest buzz will not be around the actual profit/loss figures (these can be altered with one-time charges and other earnings changes), it will be around sales of BlackBerry’s new smartphones, the BlackBerry Z10 and BlackBerry Q10. Both sides of the BlackBerry battle are counting down to that date believing it will prove them correct in the setting of either a massive short squeeze or the planting of another nail in BlackBerry’s coffin.

Q4 earnings

Followers of BlackBerry probably remember this story, specifically from the Q4 earnings reported on March 30. What was being hyped to be the tell all earnings that would show the acceptance level of the Z10 and launch either a sell-off or short squeeze was met with a rather muted response in terms of price change on the day. Conclusion: Not enough data since the Z10 had not had enough time since its release, let alone in the American market. Everyone seemed to pack up and agree that the next quarter would tell the story.

This quarter

All the players are back now with bulls throwing around their numbers and bears throwing around theirs, all with enough conspiracy theories about manipulation to paint Wall Street as the next Area 51. But since the Q10 has only been released for a few months and is only just beginning to hit American shelves, it should be apparent that once again there is not enough data to conclusively determine the sales of the Q10. With the Q10 being considered the BlackBerry smartphone with higher expected demand, sales data that cannot paint a complete Q10 picture would not be satisfactory in determining BlackBerry’s future outlook.

Time for the echo chamber again

Just because the Q1 results will not give a clear picture of BlackBerry due to the omission of key sales data for the Q10, does not mean analysts will calmly take this in and wait until the next quarter. Undoubtedly, someone will compare BlackBerry’s sales to those of Samsung’s (NASDAQOTH: SSNLF) phones powered by Google’s (NASDAQ: GOOG) Android operating system. However this is a terrible benchmark comparison for BlackBerry. Sales of the Samsung Galaxy S4 alone have topped 10 million units and are expected to rise as high as 80 million. Clearly the Android operating system is popular and Samsung and Google have done a fine job in stealing market share from Apple, but expectations for BlackBerry are not nearly this high. If BlackBerry were to sell this many smartphones, its share price could easily rise into the triple digit range but not even the most bullish of analysts are expecting these figures from the company.

Earnings effect

When BlackBerry reports results on June 28, the market will be looking at sales of the Z10 and Q10, as well as how severe the decline in subscribers turns out to be. However, sales of the Q10 will be largely incomplete as they will only have a short period of worldwide sales and give little indication of American sales. Thus, the next earnings report will continue to leave questions in investors’ minds and the BlackBerry battle will continue unless some component of the report absolutely blows estimates away. For Samsung and Google, their concern is not with BlackBerry, it’s with Apple and the iOS system that holds a much larger segment of the market and with the state of smartphone demand as a whole. As a BlackBerry shareholder, I am excited to see the Q1 results but am even more interested in the Q2 results.

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Alexander MacLennan owns shares of BlackBerry. The Motley Fool recommends Google. The Motley Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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