[morganplus8]

Thanks for the explanation. So my specific question now is: Why are you considering resistance areas of the downward slope of the long term 5yr selloff as resistance as the stock makes it's way back up the numbers? Is there a logical relationship between resistances going up and going down?

I will see if I understand your question here. First, have a look at a simple 5-year chart:



As you can see, the historic high of this company occurs in 2008 followed by a long and methodical decline. We are rallying today, within that downtrend formation and so, we have some work to do before we can celebrate a major move in RIMM stock. We have to breakout of this 5-year pennant formation on great volume and hold our prices on a retest later on. And so, the $ 15.00 share area is huge resistance and the reason why the short interest is so high. Shorts have been right since 2008 and we are trying to end their control of the stock. You will see the short interest going up as long as the stock fails to breakout here. Can we do it, of course we can but it will take 200 million shares and a massive short squeeze to get the job done.

Now, within that bearish 5-year chart is this short-term rally:



We are addressing that downtrend line that started way back in 2008 and we have some distance to go here. The shorts control the stock and to date, they are winning this battle. But RIMM is about to rewrite the market`s attitude about its stock and will try to break the hold on the shares. Prem Watsa and his boys are aware of the trading in the stock and I`m sure they have developed a battle plan to take this much higher. Note that since we closed above $ 14.00 we haven`t tested the support area much at $ 14.20 a share, we have formed a pennant triangle here that is a cooling off point from which to start another rally. This is what I want to see happen, pop up, consolidate our gains and do it again and stay well within the up channel. In order to move up in a bear trending stock, we need to get rid of the weak hands, those who bought and have had to endure losses for many months. Most people are happy to get out of a bad investment and we have to buy them out and this times time. Is it a good buy here, NO!! You would buy a stock when it is on the uptrend line and sell it when it hits the top of the channel. We are smack dab in the middle which is poor timing. Now if you know that news is around the corner, you might buy some stock knowing that news trumps everything else here. Let`s see if this pennant formation holds, I think it will, and ideally we would close slightly positive here today (definitely not make new lows) and set ourselves up for a pop above $ 15.00 a share. I like how it is trading so far, we need to clear $ 15.00 but that can be towards the end of next week, it doesn`t matter as the real fireworks begin the week of the launch!! GL

[plasmid_boy]

I guess I lied about not playing the stock any more. Couldn't help it. Sold half of my position, looking for lower re-entry to pick up some more shares. I suck.

Wish that I have the knowledge to do that. I am just going by the gut feeling that BB10 is going to be a hit and so I am hanging on to ride it out.

[chrysaurora]

But RIMM is about to rewrite the market`s attitude about its stock and will try to break the hold on the shares. Prem Watsa and his boys are aware of the trading in the stock and I`m sure they have developed a battle plan to take this much higher.

I am a newbie investor. So, once we cross $15.2 resistance with significant volume (200M stocks), the stock is going to turn bullish for remainder of the year (unless there is some bad news). Which means, $40 by June. $75 to $125 by January 2014. I've been predicting this since last few months but without the benefit of any technical analysis. Now, with your (morganplus8 's) explanation, I am feeling even better :-)

[Triplell]

I am a newbie investor. So, once we cross $15.2 resistance with significant volume (200M stocks), the stock is going to turn bullish for remainder of the year (unless there is some bad news). Which means, $40 by June. $75 to $125 by January 2014. I've been predicting this since last few months but without the benefit of any technical analysis. Now, with your (morganplus8 's) explanation, I am feeling even better :-)

I'm not sure I agree completely and I would adhere more to your bottom numbers. I would say $40-$60 by EOY would be a more likely candidate on the with the success of BB10

[BThunderW]

Of course it's a gamble, but based on technicals, quite a few bearish signs yesterday so decided to play it.

Wish that I have the knowledge to do that. I am just going by the gut feeling that BB10 is going to be a hit and so I am hanging on to ride it out.

[morlock_man]

It really depends on how well they compete with the Apple, Android and Microsoft ecosystems.

If they offer better hardware build quality than Apple and license their operating system to current Android handset developers for the low-end BB10 models, there could be a mass market migration to the new platform over the next few years that begins this year. With the current smartphone and tablet marketplace plus the 'Internet of things', BB10 looks to have the best potential out of all of them as the next generation platform.

[Superfly_FR]

Mid-day, moderate volume, back to opening value.
Calm seas, blue sky. Easy babe, take your time (and BThunderW, stop shaking that stock like h3ll ! lol).

[zyben]

"Prem Watsa and his boys are aware of the trading in the stock and I`m sure they have developed a battle plan to take this much higher."

Morgan, I appreciate the work you do in this thread. It's awesome having you here. I'm curious whether you're aware of what Prem Watsa and his team have done over at OSTK. I'm not an Overstock.com shareholder, but I'm a huge admirer of ceo Dr. Patrick Byrne and the work he's done fighting hedge funds who try destroying companies and their stocks using naked short selling and by manipulating news(see DeepCapture.com for some reference). The long term charts of OSTK and RIMM bear some resemblance, although the companies and their fundamentals may not. Prem Watsa himself has had similar issues with these dirty hedge funds in the past. I think he's out to annihilate these bas****s, and will not stop until he does. My money's behind Prem. Go Prem and go RIMM!!!

[ubizmo]

I never bought stock in my life before, but I bought some shares of RIMM a couple of days ago. I don't pretend to be a skilled investor and I didn't risk a lot of money. I just did it because the things we're seeing about BB10 give me confidence. I see nothing wrong with going with that and holding it for a few years.

[Zarpan]

I am a newbie investor. So, once we cross $15.2 resistance with significant volume (200M stocks), the stock is going to turn bullish for remainder of the year (unless there is some bad news). Which means, $40 by June. $75 to $125 by January 2014. I've been predicting this since last few months but without the benefit of any technical analysis. Now, with your (morganplus8 's) explanation, I am feeling even better :-)

I'd say that performance post-launch will be mostly driven by how sales and margins do relative to expectations. For it to get to the $75 to $125 range by January 2014, I'd have to think that EPS would need to be getting up to $1.50 per quarter at that time, so $6 annualized.

That would be about a billion in pre-tax income per quarter. Probably would need to be selling 10-11 million BB10 units at $150+ per unit gross margins to make those numbers.

ASP and margins are probably one of the most interesting X-factors right now. The Raymond James article that estimated 18 million BB10 units were needed for break even in FY14 assumed a 30% gross margin on $375 ASP = $112.50 per unit gross margins. If there was a $500 ASP with 35% gross margins instead (which I think may be possible), per unit gross margins go up to $175.

All else equal, that would mean that RIM would only need to sell 11.5 million BB10 units to break even, and 18 million sold would result in FY14 EPS of around $1.60 (assuming about a 26% tax rate).

[Superfly_FR]

ASP and margins are probably one of the most interesting X-factors right now. The Raymond James article that estimated 18 million BB10 units were needed for break even in FY14 assumed a 30% gross margin on $375 ASP = $112.50 per unit gross margins. If there was a $500 ASP with 35% gross margins instead (which I think may be possible), per unit gross margins go up to $175.

(First hand) Info that I had regarding this was an ASP in the €450 range. (as of date, 1 Euro = 1.334 U.S. dollars => $600)

[BBNation]

one thing I heard over and over that Apple, google, MS is too big and strong. But is there a rule that 4 major players can not exist in this world ? We have 10 car manufactures and they all survive, same goes for smartphones. Let of people do not udnerstand that RIM offers unique portfolio and services and it has it's market.

[BBNation]

That is why rim releasing 6 models to compete in Every inch of the world

[chrysaurora]

I'd say that performance post-launch will be mostly driven by how sales and margins do relative to expectations. For it to get to the $75 to $125 range by January 2014, I'd have to think that EPS would need to be getting up to $1.50 per quarter at that time, so $6 annualized.

Agree. But market is kinda smart. Stock price will also take into account "future" prospects of BlackBerry. So, while your analysis requires sale of roughly 11 M BlackBerry 10 devices/quarter (with $150 margin per device sold) for stock to be $75 to $125, I estimate the number to be actually much lower - only about 7M sales per quarter or total of 28 to 30 M per year.

Here is why :
- First, 28 to 30 M sales will have huge impact on stock price. This will be the primary driver of stock price. Probably drive up to $50 on its own.
- Next, RIM would have gained some traction in Mobile Payments before the end of the year
- in addition, RIM/QNX would have more than just "concept cars" by end of 2013. Some BB/QNX cars will be in imminent-release mode by the end of 2013.

All in all, this would tell investors that RIM is going to earn not just from BlackBerry 10 devices but also other sources (mobile payments, QNX licensing, cut from music/video sales, cut from app sales). As other revenue sources become clearer, the stock price will take those into account. And stock price will likely end up between $75 to $125 (even if RIM only sells 28M to 30M BBs in this year)

[drummer_god]

will the shares pop up with the release or announcement of every new bb10 handset?
hmmm....

[mcmolineux]

will the shares pop up with the release or announcement of every new bb10 handset?
hmmm....

Depends if the handset looks good or not (ie, if the market thinks it will sell).

[sf49ers]

I'd say that performance post-launch will be mostly driven by how sales and margins do relative to expectations. For it to get to the $75 to $125 range by January 2014, I'd have to think that EPS would need to be getting up to $1.50 per quarter at that time, so $6 annualized.

That would be about a billion in pre-tax income per quarter. Probably would need to be selling 10-11 million BB10 units at $150+ per unit gross margins to make those numbers.

ASP and margins are probably one of the most interesting X-factors right now. The Raymond James article that estimated 18 million BB10 units were needed for break even in FY14 assumed a 30% gross margin on $375 ASP = $112.50 per unit gross margins. If there was a $500 ASP with 35% gross margins instead (which I think may be possible), per unit gross margins go up to $175.

All else equal, that would mean that RIM would only need to sell 11.5 million BB10 units to break even, and 18 million sold would result in FY14 EPS of around $1.60 (assuming about a 26% tax rate).

that is not far off, RIM made $4.50-$5 in 2009 and 2010, based on the current smartphone growth rate I will be not be surprised even if they pull in $1 billion each quarter upon BB10 launch, they subscriber base is at the top in years and combined with optimized operational costs and reduced work force should save them enough money. $6/share profit is not far off IMO

[drummer_god]

stock didn't really move in any direction today ( from open to close, that is ).
this can only be seen as a good sign, according to the Prophet..lol

[Superfly_FR]

stock didn't really move in any direction today ( from open to close, that is ).
this can only be seen as a good sign, according to the Prophet..lol

BTW, I noticed that we have now a trend to 53% buyers in the thread

[Zarpan]

Nice movement in pre-market. Last trading at $15.54 from what I can see.

[Superfly_FR]

Nice movement in pre-market. Last trading at $15.54 from what I can see.

yup. High 15.70 - low 14.99.
We might have something strong today ...

[vgwillm]

Hey superfly, where did you get your per-market sheet? Looks great ones I have sen don't break it out by time like yours. Thx

Another issue we have to look at when it comes to long term 1+ years is does Rimm have a plan for new models after the z10/x10. I know they are planning 6 phone releases but I am talking z10(generation 2). Z10 looks like a great product but they will need to keep building off of it to stay in the "top 3".

[Zarpan]

Looks like Jefferies / Peter Misek may have upgraded RIM again. I haven't seen anything from an official source, but some people seem to have seen a report where he raised the target price to $19.50 with an upside scenario of $56.

[surreyjack71]

Hey superfly, where did you get your per-market sheet? Looks great ones I have sen don't break it out by time like yours. Thx

Another issue we have to look at when it comes to long term 1+ years is does Rimm have a plan for new models after the z10/x10. I know they are planning 6 phone releases but I am talking z10(generation 2). Z10 looks like a great product but they will need to keep building off of it to stay in the "top 3".

You can get the pre market breakdown off nasdaq.com

[plasmid_boy]

yup. High 15.70 - low 14.99.
We might have something strong today ...

Maybe your rain dance is working