NEW YORK (
) -- I'm long
(BBRY - Get Report)
. Therefore, you can imagine I was thrilled to see Societe Generale upgrade the company to buy from sell yesterday.
The stock jumped 6%, and it's up another 2% today.
Given that I'm long the stock, I'm biased to think it is "cheap" and deserves all the upgrades it can get.
However, I've got to be straight with you: the Societe Generale report simply makes no sense.
Let me summarize.
BlackBerry will next report earnings on June 28 for the May quarter. This is a battleground stock to say the least. Short interest on the float is in the mid-to-high 30% range. The revenue and earnings estimates for the May quarter are all over the map on Wall Street.
Bears believe the June 28 report will be the beginning of the end for the company. Bulls think it will be the start of an amazing comeback.
SocGen took its revenue estimates up from $2.7 billion for the quarter to $3.7 billion -- a huge upward revision.
The analysts based this change on some "channel checks" they did. The channel checks seemed to be done mostly in the U.K. However, they defended this approach by saying that the U.K. would be representative of other markets.
The U.K. got copies of the Z10 and Q10 earlier than other countries. Therefore, SocGen says how consumers react in the U.K. will provide a preview of how the devices will be received in other countries. That's perhaps defensible, but it is important to understand where they're coming from.
They say things are going well in the U.K. for BlackBerry -- especially for the Z10. They also point to some StatCounter data that show total Internet traffic on wireless devices in the U.K. has actually bottomed for BlackBerry in recent months and is at last starting to creep up.
So, here's why they lose me. They believe that BB7 devices are plummeting in popularity now that the BB10 devices are available. SocGen thinks that BB7s will drop from 5 million devices shipped last quarter to 1 million this quarter.
Then, they think that Z10s will go from 1 million devices last quarter to 4 million devices shipped this quarter. They also think that 1 million Q10s will get shipped this quarter, even though they were only available for a few days at the end of the quarter in the U.K. and Canada.