IBJNews

Struggling BlackBerry maker could be drag on BrightPoint

Back to TopCommentsE-mailPrintBookmark and Share

BrightPoint executives are watching Research in Motion Ltd.’s next move as closely as anyone in the wireless industry. That's because the Indianapolis-based company gets about 10 percent of its distribution business from the struggling BlackBerry maker.

Toronto-based RIM said Tuesday that it won’t turn a profit this quarter, and that it has hired investment bankers to explore strategic options, suggesting the company might be sold.

Last time a major wireless industry merger was announced—in March 2011, when AT&T said it wanted to buy T-Mobile—BrightPoint’s stock price dropped 21 percent over the following week. At the time, analysts predicted that AT&T, which was not a BrightPoint logistics customer, would cancel T-Mobile's contract with the company, but the merger deal died in December.

This time around, major consolidation in the industry could affect the distribution side of BrightPoint’s business, and the potential impact is less clear.

The company’s stock closed Wednesday at $4.89 per share, which is close to its 52-week low of $4.83. The stock has fallen 60 percent, from $11.99, since Feb. 1.

RIM’s troubles are one factor of many related to the company's stock performance, BrightPoint's director of investor relations, Tom Ward, said. BrightPoint has lowered its own earnings forecast this year, based on slower growth in the whole industry.

“Wireless overall seems to be out of favor with investors,” Ward said.

BrightPoint has shifted more of its business from logistics, where it deals with wireless service companies, to buying and reselling devices. BrightPoint’s two largest distribution customers are Nokia and Samsung, followed by RIM. Distribution accounted for $1.2 billion of BrightPoint's $1.37 billion in first-quarter revenue.

A RIM sale could mean simply that a larger share of BrightPoint’s business goes to the acquiring company, Ward said. “We may benefit in that way because we have relationships with all the players in the wireless industry.”

RIM could also end up licensing its technology to another manufacturer, or put off a sale in hopes of a successful launch of its BlackBerry 10 operating system, the Wall Street Journal reported Thursday.

It’s unclear how those moves would affect BrightPoint.

“We’re doing everything we can to make sure we operate as efficiently as possible,” Ward said.

BrightPoint faced headwinds well before the latest revelations about RIM’s future.

The company revised its earnings per-share estimates downward in February after losing a customer, and its first-quarter earnings, reported in April, did not meet the Wall Street consensus.

Analysts often look to BrightPoint for a broad perspective on the industry, because the company handles logistics for a number of wireless operators. Ward said BrightPoint’s cautious outlook is turning out to be accurate.

Heading into the year, BrightPoint predicted the industry would be flat or up by about 5 percent, Ward noted, “and we were skewered for it.”

On May 23, equity analysts with Oppenheimer Holdings Inc. lowered their price targets on a number of wireless-industry stocks, including Brightpoint, based on flat growth expectations. Oppenheimer predicted BrightPoint would reach $9 per share, rather than $11, this year.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. why oh why does this state continue to elect these people....do you wonder how much was graft out of the 3.8 billion?

  2. i too think this is a great idea. I think the vision and need is there as well. But also agree with Wendy that there may be better location in our city to fulfill this vision and help grow the sports of hockey and figure skating in Indy. Also to help further develop other parts of the city that seem often forgotten. Any of the other 6 townships out side of the three northernmost could benefit greatly from a facility and a vision like this. For a vision that sounds philanthropic, the location is appears more about the money. Would really like to see it elsewhere, but still wish the development the best of luck, as we can always use more ice in the city. As for the Ice growth when they return, if schedules can be coordinated with the Fuel, what could be better than to have high level hockey available to go see every weekend of the season? Good luck with the development and the return of the Ice.

  3. How many parking spaces do they have at Ironworks? Will residents have reserved spaces or will they have to troll for a space among the people that are there at Ruth Chris & Sangiovese?

  4. You do not get speeding ticket first time you speed and this is not first time Mr.Page has speed. One act should not define a man and this one act won't. He got off with a slap on the wrist. I agree with judge no person was injured by his actions. The state was robbed of money by paying too much rent for a building and that money could have been used for social services. The Page family maybe "generous" with their money but for most part all of it is dirty money that he obtained for sources that are not on the upright. Page is the kind of lawyer that gives lawyers a bad name. He paid off this judge like he has many other tine and walked away. Does he still have his license. I believe so. Hire him to get you confiscated drug money back. He will. It will cost you.

  5. I remain amazed at the level of expertise of the average Internet Television Executive. Obviously they have all the answers and know the business inside and out.

ADVERTISEMENT