Research In Motion Ltd. (RIM) is launching seven BlackBerry 7 handsets starting in mid to late August, representing its largest product cycle historically -- which is twice broader than last year's BlackBerry 6 product cycle, RBC Capital Markets said in a note to clients.
BlackBerry 7 launches are expected at all major U.S. and global carriers by the end of 2011.
"While not game-changing (evolutionary UI, design) and reviews expected to be mixed, BlackBerry 7 handsets offer competitive processors, touchscreens, some with 4G (HSPA+), and may stimulate an upgrade cycle. For example, the Bold 9900/9930 may be popular with BlackBerry fans," wrote Mike Abramsky, an analyst at RBC Capital.
Currently, Abramsky expects a QNX Smartphone in the first quarter of calendar year 2012, expected to be similar to a mini-PlayBook, with a possibly larger than 4-inch touchscreen, dual cameras and dual-core processor.
Abramsky expects the QNX BlackBerry OS to ship with an email client and Android app player, also available for PlayBook (as per RIM) in the coming months.
According to Abramsky, the BlackBerry 7 uptake risks are: Visibility to uptake remains limited; supply chain data (EMS outlooks) remains mixed (could reflect conservatism on RIM); US share losses and "stigma" around BlackBerry (given negative publicity) could offer headwinds to uptake, and the launches will compete with Apple Inc.'s iPhone 5, Motorola Droid Bionic (expected September).
Abramsky looks for checks, promotions in proximity to expected product launches to affirm uptake. While possibly offering a near-term earnings catalyst, he believes BlackBerry 7 is unlikely to reverse deeply negative investor sentiment over RIM's future, pending improved visibility to success or failure of pending QNX handsets expected 2012.
"We maintain our Sector Perform given low visibility to RIM’s long-term earnings momentum, sustainability of market share, and competitive positioning. While not game-changing and unlikely to reverse negative sentiment, BlackBerry 7 product cycle may offer a near-term earnings catalyst," said Abramsky.
Depending on BlackBerry 7 uptake, Abramsky's fiscal 2012 EPS ranges in his Scenario Analysis from $4.75 (low case), on $283 average selling prices (ASPs), or 9 percent below Street, to $6.00 (high case), on $304 ASPs, or 16 percent above Street.
Abramsky said BlackBerry 7 represents 40 percent (22 million) of his 54 million fiscal 2012 unit forecast (Base Case), on $292 ASPs. Should uptake equal/exceed his Base Case Scenario (above street), RIM may offer fiscal third quarter guidance above Street $1.37 (when RIM reports Sept. 15).