Surprisingly, BlackBerry's Passport Might Actually Be a Bigger Deal Than Apple's iPhone 6
The Passport, iPhone 6, and iPhone 6 Plus were all highly anticipated smartphones that launched in September. Apple's iPhone 6 models sold 10 million units during their launch weekend, while BlackBerry's Passport sold just 200,000 units during its first few days in select markets. While the disconnect between initial sales is wide, the Passport's impact on BlackBerry's stock might be more meaningful than the iPhone will prove for Apple's stock.
How to gauge the performance
When comparing the Passport to the iPhone 6 and 6 Plus, it's not quite fair to put them on the same pedestal.
The iPhone accounted for more than half of Apple's $37.4 billion in total revenue during its last quarter, and historically accounts for large portion of its operating profit.
BlackBerry is a much smaller company, creating less than $1 billion in revenue during its last quarter. Hardware accounted for 46% of total sales at BlackBerry during its second quarter, and less than 40% during first quarter. As a result, it's not wise for investors to judge the Passport's success relative to the iPhone 6, but rather as it compares to BlackBerry's market capitalization.
How Passport is more meaningful than the iPhone 6 models
Ultimately, judging initial sales for these devices versus the respective market capitalizations of Apple and BlackBerry can tell investors which product's sales performance is most likely to create stock gains. As BlackBerry has a smaller market capitalization than Apple it does not need the Passport to produce iPhone-like sales to move its stock. BlackBerry had a market capitalization of $5.35 billion as of Sept. 30. With unit sales of 200,000, BlackBerry sold 37,383 units per $1 billion of market capitalization.
In selling 10 million of the latest iPhones, Apple sold 16,458 units per $1 billion of market capitalization -- roughly half what BlackBerry achieved using that metric. Apple's market capitalization was $607.6 billion as of Sept. 30.
Therefore, investors can see that based on market capitalization alone, the Passport's sales of only 200,000 units might actually be more meaningful for BlackBerry's stock than the iPhone 6 and 6 Plus are for Apple.
BlackBerry must still prove that demand for the Passport can last beyond a launch period. The big problem for the handset maker over the last couple years has been its inability to keep sales consistent. Meanwhile, tight supply constraints and an overwhelming share of the overall smartphone market keep sales of iPhones high year round.
Investors don't yet have enough information to conclude that the Passport can be meaningful for BlackBerry's, which explains why shares trade at such a low valuation.
BlackBerry shares have significantly discounted the fundamental potential of the Passport, at least compared to Apple's iPhone 6 models. In retrospect, it's no surprise that investors have overlooked the Passport, as BlackBerry has been unable to prove itself relevant in the smartphone space for quite some time, which includes the epic failure of its BB10 operating system.
However, with a unique square appearance aimed at enterprise users, the inclusion of Amazon.com's 240,000 Android applications, and countless other software upgrades, the Passport is a premium phone that might just have a shot at moving the needle in BlackBerry's stock. Investors should remain skeptical until longer-term demand is seen, but based on early Passport sales alone, BlackBerry has definitely proven itself a stock to watch. If sales remain strong, BlackBerry might just be a better investment opportunity than the almighty Apple.
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The article Surprisingly, BlackBerry's Passport Might Actually Be a Bigger Deal Than Apple's iPhone 6 originally appeared on Fool.com.Brian Nichols owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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