Originally Posted by
ardakca In the earnings call they clearly said that BlackBerry will end hardware production at the end of the fiscal year. Moreover, we have discussed it several times, just manufacturing a phone costs around 200 $ (mid range might be lower). So a very successful business is where you have 40% profit. But this is not the case for smartphones. Sony has the highest profit margin from a single unit. Their average selling price is 422 $ and their pure profit is 23.2 $ so it is around %5 percent a unit? So let's assume BlackBerry sells the mercury for 550 $ and an average mid range is around 200 for pure manufacturing costs, you have 350 $ left. And highest profit margin is %5 which accounts for 22.5 $.
Putting it simply, you spend 200 for manufacturing, you'll have 23 $ dollar pure profit, which leaves us with 327 $ dollars for design, distribution and marketing. We know there are no marketing :)). BlackBerry already spent around 300 a unit for their estimate selling numbers. So if they sell this phone even for 350 $ they won't have to write it down, plus if it gains ground they will have solid case for licensees.
So I believe shareholders must lay easy. I am kind of bullish on this one. The reason Chen gave the green light IMO is they already wrote down the design and R&D costs for the Mercury. Thus, a limited production (their estimate) would have no impact if they can sell at a price point which includes manufacturing, distribution and maintenance? We should find numbers. In my case everything is kind of an assumption. There might be nothing crazy about it after all.