Why $0.25 EPS Is All I Want For Q1F2014

What's so significant about $0.25 EPS? Is it too much to ask for when the consensus estimate is $0.05-$0.07?

Let's go back to Q4F2013...

CEO Thorsten Heins said "We have implemented numerous changes at BlackBerry over the past year and those changes have resulted in the Company returning to profitability in the fourth quarter. Including the anticipated 50% sequential increase in marketing spending, the Company believes it will approach breakeven financial results in the first quarter based on its lower cost base, more efficient supply chain, and improved hardware margins."

Regarding the outlook for this quarter, the company said, "including the anticipated 50% sequential increase in marketing spending, the Company believes it will approach break-even financial results in the first quarter based on its lower cost base, more efficient supply chain, and improved hardware margins."

BlackBerry Up 4%: FYQ4 Rev Misses, Surprise Profit; Sees Q1 Break-Even Possible - Tech Trader Daily - Barrons.com

What does that mean to you? To me at the time, I thought it meant to break-even for Q1F2014. What confused me more was that BlackBerry registered $0.19 EPS on 1 million Z10 sales in Q4F2013. So how could you not break-even in Q1 with an expected 3-4 million Z10+Q10 sales?

Perhaps Heins wasn't targeting an EPS break-even goal for Q1F2014, but rather for the company to break-even on the EPS TTM! Why $0.25 or maybe even $0.24? Let's look at the previous 3 quarters' EPS:

Research In Motion Limited Financials - The Globe and Mail

Q2F2013 = ($0.45)

Q3F2013 = $0.02

Q4F2013 = $0.19

In order for the EPS TTM to reach break-even we would need $0.24, to be profitable we need $0.25.

Why is a positive EPS TTM important? It could be important because there may still be a lot of money on the sidelines undecided about the next step. These monies belong to pension funds, mutual funds, 401(K)s, and the retail public, and they may be governed by rules restricting them from investing in BlackBerry. With $0.25 EPS, BlackBerry will be officially profitable and out of the doghouse; hopefully by removing those restrictions, Blackberry could welcome new investors.

In the long-term, BlackBerry is setting up quite nicely. With growing earnings and future growth prospects (new product launches with 6 in total this year, BBM multi-platform crossover and monetization via BBM Money, BBM Channels, BES10.1.1 implementation, and BB10/QNX licensing e.g. the most recent being with Garmin and their K2 system), there's no where for BlackBerry to go, but up.

Special thanks all my friends that I've had the honour of meeting while 'longing' BlackBerry. Not only are you guys a great team, but more importantly a great family. I also want to thank oneinfiniteloop for providing me the idea for writing this article. I am also greatly appreciative for the support and knowledge that I've received from the fine folks here at Seeking Alpha, from Stockhouse as well as Stocktwits. And thanks to BlackBerry support sites such as Crackberry.com, N4BB.com, blackberryos.com, rapidberry.net, nerdberry.net and many others. Thank you all. May we all be prosperous and successful in the future.

Originally Posted by sonbuster

What's so significant about $0.25 EPS? Is it too much to ask for when the consensus estimate is $0.05-$0.07?

Let's go back to Q4F2013...

CEO Thorsten Heins said "We have implemented numerous changes at BlackBerry over the past year and those changes have resulted in the Company returning to profitability in the fourth quarter. Including the anticipated 50% sequential increase in marketing spending, the Company believes it will approach breakeven financial results in the first quarter based on its lower cost base, more efficient supply chain, and improved hardware margins."

Regarding the outlook for this quarter, the company said, "including the anticipated 50% sequential increase in marketing spending, the Company believes it will approach break-even financial results in the first quarter based on its lower cost base, more efficient supply chain, and improved hardware margins."

BlackBerry Up 4%: FYQ4 Rev Misses, Surprise Profit; Sees Q1 Break-Even Possible - Tech Trader Daily - Barrons.com

What does that mean to you? To me at the time, I thought it meant to break-even for Q1F2014. What confused me more was that BlackBerry registered $0.19 EPS on 1 million Z10 sales in Q4F2013. So how could you not break-even in Q1 with an expected 3-4 million Z10+Q10 sales?

Perhaps Heins wasn't targeting an EPS break-even goal for Q1F2014, but rather for the company to break-even on the EPS TTM! Why $0.25 or maybe even $0.24? Let's look at the previous 3 quarters' EPS:

Research In Motion Limited Financials - The Globe and Mail

Q2F2013 = ($0.45)

Q3F2013 = $0.02

Q4F2013 = $0.19

In order for the EPS TTM to reach break-even we would need $0.24, to be profitable we need $0.25.

Why is a positive EPS TTM important? It could be important because there may still be a lot of money on the sidelines undecided about the next step. These monies belong to pension funds, mutual funds, 401(K)s, and the retail public, and they may be governed by rules restricting them from investing in BlackBerry. With $0.25 EPS, BlackBerry will be officially profitable and out of the doghouse; hopefully by removing those restrictions, Blackberry could welcome new investors.

In the long-term, BlackBerry is setting up quite nicely. With growing earnings and future growth prospects (new product launches with 6 in total this year, BBM multi-platform crossover and monetization via BBM Money, BBM Channels, BES10.1.1 implementation, and BB10/QNX licensing e.g. the most recent being with Garmin and their K2 system), there's no where for BlackBerry to go, but up.

Special thanks all my friends that I've had the honour of meeting while 'longing' BlackBerry. Not only are you guys a great team, but more importantly a great family. I also want to thank oneinfiniteloop for providing me the idea for writing this article. I am also greatly appreciative for the support and knowledge that I've received from the fine folks here at Seeking Alpha, from Stockhouse as well as Stocktwits. And thanks to BlackBerry support sites such as Crackberry.com, N4BB.com, blackberryos.com, rapidberry.net, nerdberry.net and many others. Thank you all. May we all be prosperous and successful in the future.

well said :)

i guess this is a blog you posted on SA

Originally Posted by GTiLeo

well said :)

i guess this is an blog you posted on SA

Thank you, yes, it's just an instablog.

i forgot to add the direct link
http://seekingalpha.com/instablog/73...4?source=kizur

Excellent piece. Far better written and thought out than most of the garbage that passes for analysis these days.

I agree 100 percent. Slow and steady, good old fashioned business wins the race because it's a long race.

I expect $.35 per share but know that this is optimistic and won't be disappointed at all with $.25.

If it were less than that, I would be a bit disappointed but still cautiously bullish in the long term


Posted via CB10

Hey sonbuster, you make some really good points. I think TH was playing it really safe with those comments and he managed to convince analysts that earnings will be breakeven.

I'm expecting a blowout eps because bb10 margins are significantly higher and unit sales should be greater with bb10 than bb7. I think revenues will be significantly higher but expenses should have remained on par with last quarter.

Channel fill should also strengthen sales.

Posted via CB10

Genius! Well said.

Posted via CB10

Originally Posted by theRock1975

Hey sonbuster, you make some really good points. I think TH was playing it really safe with those comments and he managed to convince analysts that earnings will be breakeven.

I'm expecting a blowout eps because bb10 margins are significantly higher and unit sales should be greater with bb10 than bb7. I think revenues will be significantly higher but expenses should have remained on par with last quarter.

Channel fill should also strengthen sales.

Posted via CB10

folks are probably missing BES10 purchases in their guesses too, not another not we have to remember BBRY last quarter was at 40% gross margins and its only expected to increase this quarter Gus Papageorgiou is expecting over $1 EPS, which could be right considering last quarter with only a fraction of BB10 sales and the launch events they still had $.35 EPS.

http://www.cnbc.com/id/100849661
there is a video where gus talks about BBRY and tomorrows report

we will see tomorrow but i hope things show better then expected

I think we might have to wait a little longer for BES10 revenue since BlackBerry offers a trial period to its corporate customers..

Posted via CB10

Originally Posted by _dimi_

I think we might have to wait a little longer for BES10 revenue since BlackBerry offers a trial period to its corporate customers..

Posted via CB10

you may be right

you got it! Just one minor over sight, though....you forgot the negative sign XD

Posted via CB10