[11pts]

A calculated estimate on how the sales of the z10 are going so far.

http://www.seekingalpha.com/article/...d?source=kizur

Since the end of January when the BlackBerry (BBRY) Z10 phone was introduced, there has been a lot of speculation about how well the phone is selling. At the low end of the spectrum are estimates from Pacific Crest and Canaccord of 275,000 to 325,000 phones, along with a sell recommendation and a $9 target price. Peter Misek of Jefferies has an estimate of 500,000 phones for February and 4 million phones for Q1, 2014, with a buy recommendation and a target price of $19.50.

The Z10 phone was launched in the UK at the end of January, in Canada on February 5th, in the UAE on February 10th, and in several other countries later in the month, including India which got its first Z10 phone on February 25th. The all important US launch has been delayed until mid-March.

BlackBerry has not provided any firm data, and will probably not publish any figures until the announcement of the Q4*2013 results on March 28th. However, two published statements, one originating from BlackBerry, and one from a Canadian retailer give us a basis for estimating sales in Canada and the UK:

�Half of BlackBerry Z10 sales in Canada and one-third of UK sales have been made to users coming from other platforms.�

�Canadian retailer Glentel said that the Z10 has since its launch been the �leading smartphone� in its more than 330 retail outlets across Canada.�

I have used these two statements, along with sales data from the last quarter of 2012 to predict sales for February, and long term sales for the Z10. I have assumed that the sales consist of three components:

Base sales - Sales to users who would normally be buying a BlackBerry phone, even without the Z10 launch.

Pent-up demand - Sales to users who have been waiting for the Z10 launch before buying a phone.

Switchover sales - Sales to users who are switching from other platforms.

Based on sales data from the last quarter of 2012, from various sources, I have estimated the total smartphone market to be 1,000,000 phones per month in Canada and 2,500,000 phones per month in the UK. I also checked worldwide smartphone sales for the first quarter of 2012 (152 million phones) versus the last quarter of 2011 (149 million phones) to see if I should be adjusting for seasonal variations.

Canadian Sales

The statement from Glentel has to be read with some caution because although Glentel is the largest independent retailer, its sales are small compared with the sales made by the network operators. Its stores, which mostly use the brand name �Wireless Wave�, account for less than 10% of Canadian smartphone sales, and sell mostly BlackBerry, Android and Windows phones. Being the leading smartphone in sales at Glentel therefore means the BlackBerry is outselling the Android and Windows phones, which gives it at least 40% of the total market, probably closer to 50% if you add in the switchovers from the Apple (AAPL) iPhone.

If we project that market to the whole of Canada, that would imply sales of 500,000 Z10 phones. If 50% are switchover sales, that implies that 250,000 users have switched to BlackBerry from other platforms. In the last quarter of 2012, BlackBerry had over 10% of the Canadian market for smartphones, equivalent to sales of 100,000 phones. Subtracting the base sales and the switchover sales from the total implies that 150,000 Z10 phones have been sold as a result of pent-up demand.

There is some extra iteration required because pent-up demand increases overall sales, which in turn increases all of the other figures. After several iterations the answer converges with the following results for the first 30 day period after launch:

Canada

Total sales

1,200,000

BlackBerry sales

600,000

Base sales

100,000

Switchover sales

300,000

Pent-up demand sales

200,000

Long term sales

400,000

In Canada, the brand name is very strong and BlackBerry has the home field advantage, a leading edge product, and sells at a similar price to other market leaders. Doesn�t it make sense that they would capture 40% of the market, long term?

UK sales

To estimate the UK sales, I have relied on an article published by Seeking Alpha member Michael Collins. While I was sunning myself on a Caribbean beach, Michael was out walking the streets of London in freezing February weather doing his own survey of BlackBerry sales. Based on his findings, I made what I consider a conservative estimate that 25% of the UK sales for February were BlackBerry Z10 phones.

Analyzing the numbers for the UK gives:

UK

Total sales

2,800,000

BlackBerry sales

700,000

Base sales

160,000

Switchover sales

210,000

Pent-up demand sales

330,000

Long term sales

370,000

In this analysis, BlackBerry captures 15% of the UK market, compared to 6.5% in the last quarter of 2013.

Worldwide sales for February

Based on the above analyses, I have used a chart published in one of Canada�s leading newspapers to estimate sales in other countries. The chart shows the breakdown of BlackBerry subscribers by country, and I have assumed that the distribution of sales will be approximately proportional to the distribution of existing subscribers. I also adjust for the number of days between the launch date and the month end. I have left out India where average income levels are very low, and high end smartphones are beyond the reach of most of the population.

To eliminate the home field advantage, I have used the UK, rather than Canada as the basis for the calculations.

Estimated daily sales for first 30 days

Days of sales

Estimated sales for February

Canada

20000

24

470,000

UK

23611

29

680,000

UAE

6439

18

110,000

Italy

2146

8

10,000

Germany

6439

8

50,000

France

8586

14

120,000

Total

1,440,000

Add in a few sales from other countries, and we arrive at a forecast of 1.5 million Z10 phones sold in February.

Long term sales forecast

Eliminating the pent-up demand component of sales, and excluding sales from poorer countries, gives the following forecast for sales after the Z10 is launched worldwide:

Estimated daily sales long term

Estimated quarterly sales

Canada

13333

1,210,000

UK

12500

1,130,000

USA

25000

2,270,000

UAE

3409

310,000

Italy

1136

100,000

Germany

3409

310,000

France

4545

410,000

Spain

4545

410,000

Netherlands

1136

100,000

Saudi Arabia

7955

720,000

Australia

1136

100,000

Others

2273

200,000

Total

7,270,000

Inputting these sales forecasts into the financial model developed for the article which I wrote last week results in a share value of $52.03.

In the above analysis, the sales forecasts of 1.5 million phones for February, and future sales of 7 million per quarter are based on very limited information, with some fairly wide ranging assumptions. However, I think it is safe to conclude that sales of the BlackBerry Z10 have exceeded the expectations of most of the analysts, and that when the real numbers are published later this month there will be upside pressure on the stock.

[Bold_until_Hybrid_Comes]

We will have to wait and see

[11pts]

We will have to wait and see

true that, though I like the authors approach. because we all know there are far too many articles drawing to conclusions without any substance

[Thunderbuck]

true that, though I like the authors approach. because we all know there are far too many articles drawing to conclusions without any substance

Note that the author is long on BBRY, too. I liked this post, and I don't see this out of the range of possibilities, but it strikes me as about the high limit of what we could hope for. I'd love to see it (I'm long on BB myself), but I'm not holding my breath on this.

[world traveler and former ceo]

Impressive analysis and shows how significantly UNDERVALUED Blackberry is right now, even under conservative estimates ... those in the know .. can see it! ...

[Dapper37]

1.5 million is inline with my expectations.
Out on a firm branch, not just a limb!
One thing to remember, A unit shipped is a unit sold on the Books. Theres a chance we shipped more then 1.5 million IMO.

[Bold_until_Hybrid_Comes]

My estimate with no objective backing or hard data to support, is 650,000 in sales will be reported on the Q1 call March 28.

[Zarpan]

One of my critiques would be that he is using too high a number for Canadian market share. Glentel's statement was not that the Z10 was outselling Android and iOS phones as a whole, but rather the Galaxy S3 and iPhone 5. That would put Z10 sales at probably 20-25% instead of 50%.

[tmurphx5]

More on the numbers...

High Inventory - Good Sign For BlackBerry - Seeking Alpha

[JasW]

Not to be provincial or anything, but this data is only worth so much with the vast bulk of the so-called "all important North American market" missing.

[mathking606]

This could be achieved. The one statement from BlackBerry that makes me think this is because in Canada it was a 50% better launch than any other launch including the Bold 9900 that did not sell that badly.

[Thunderbuck]

One of my critiques would be that he is using too high a number for Canadian market share. Glentel's statement was not that the Z10 was outselling Android and iOS phones as a whole, but rather the Galaxy S3 and iPhone 5. That would put Z10 sales at probably 20-25% instead of 50%.

Yeah, I picked up on that too. Again, would love to see the facts bear this analysis out, but it could be a stretch.

[out2golf]

Hold on and enjoy the ride. You will be rewarded greatly. Dont get cold feet and sell off on a bear raid. Be strong and reap the rewards.

[NM1981]

1.5 million is inline with my expectations.
Out on a firm branch, not just a limb!
One thing to remember, A unit shipped is a unit sold on the Books. Theres a chance we shipped more then 1.5 million IMO.

Not a chance - if we sold 1.5 million units, that would push the stock up 100% into the mid to late 20's range in a single day.

Consider this, by saying that BBRY sold 1.5 million units, you are essentially saying that BBRY would've sold 60 million units this year if it had a global launch. That is ludicrous -

[JPMorgan_]

I'm dying to buy one!!!! but still no yet released at Telcel (Mexico)

[johnny_larue]

I want to be one of those...possibly...1 million+, but I am pretty sure I want the Q10. I have to wait like a sucker.