Shares of BlackBerry (BBRY) are surging by $1.12, or 8%, at $15.11, despite some negative news flow earlier today.
A Securities & Exchange Commission filing this morning indicated that former Co-CEO Jim Balsillie had completely cleared out of his 5% position in the stock, which seemed to put pressure on the shares before market open.
At the same time, Deutsche Bank‘s Brian Modoff, who has a Hold rating on BBRY stock, and an $8 price target, this morning wrote that he sees “improving checks” of sales of the company’s recently released Z10 handset in the U.K., but that there is “still a long way to go.”
That report, while not glowing, has some aspects that may be more positive for the company:
Over the past two days, we conducted another survey of carrier stores. We used the same 30 carrier stores in the UK, but this time added 30 carrier stores in Canada. The story from each geography was very different. In Canada, many stores reported being sold out of the Z10 and the sales force was well-versed on the device�s attributes; however, a few representatives told us that they did not receive a large initial inventory. In the UK, the sales force was better-versed on the feature sets relative to the week prior; however, no stores were sold out. We maintain our Hold as we think the initial signs of this launch do not indicate the strong sales we would like to see [...] In the UK, it appears that Blackberry is correcting the missteps in made in the first week. While this may not affect initial demand there, it will go a long way towards helping them gain mind-share with the consumer and hopefully that will translate into sales over the longer term. We will continue to monitor their progress there closely, but so far, we conclude that the sales in the region have been tepid.
The stock is clearly defying any negative implications of either bit of news. The response from Street observers I’ve spoken with is bafflement: “perplexing,” “crazy,” are terms that are being employed about the surge.
One suggested that perhaps Balsillie’s clearing out his position is actually a positive, given that it might tend to remove an overhang by resolving a large block of shares.
But several other sources suggested that this may be merely “the new normal,” if you will, for a company that faces what some see as a stark divide between a tremendous resurgence in its fortunes or a final collapse.
“The Balsillie stuff is old news,” Mark McKechnie with Evercore Partners,� who took RIM public in a prior job, said to me this afternoon. “I don’t know why anyone would think that means anything.”
Rather, “We’ve seen this kind of volatility with the stock — it’s such a scale market they’re getting� into, that if they get it right, there’s earnings power, and if they get it wrong, there’s nothing.”
Prepare for more such volatility, says McKechnie. “It’s a push and tug, you’re going to have some serious volatility. There’s going to be a lot of anticipation, a lot of watching to see if they’ve gotten this right.” McKechnie has an Underweight rating on the shares and an $8 price target.
Still another Street observer replied simply, “Have you seen the stock the last 10 trading days?” The shares are down 13% since February 8th’s close, and were down 19% through yesterday’s close.
No comments:
Post a Comment