What to Expect From BlackBerry Earnings

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BlackBerry Limited (NASDAQ: BBRY) is scheduled to report its most recent quarterly results before the markets open on Friday. The consensus estimates call for a net loss of $0.09 per share on $610.99 million in revenue. The same period from the previous year had a net loss of $0.02 and $658 million in revenue.

This company provides wireless communications solutions worldwide. The company offers BlackBerry wireless solutions, including the sale of BlackBerry handheld devices, and the provision of data communication, and compression and security infrastructure services enabling BlackBerry handheld wireless devices to send and receive wireless messages and data.

However in recent years total revenue has absolutely cratered. The revenue from fiscal 2013 was roughly $11.1 billion and since then revenue has basically halved each following year. Fiscal 2014 had revenues of $6.8 billion and fiscal 2015 had revenues of $3.3 billion. If BlackBerry wants to survive it’s going to have to turn itself around, and soon. Another way out of this mess would be if BlackBerry were to be acquired.

In a previous report from Canaccord Genuity, the firm pondered the direction of BlackBerry. The firm has a Hold rating and a price target of $8, implying an upside of 12.5% from current prices.

The firm detailed in its report, regarding the fiscal first quarter performance:

While reclassified software and technology licensing revenue was well above our and consensus software only estimates, the strong sales were driven by significant one-time payments from the two technology licensing deals signed during the quarter. In fact, management lowered its overall fiscal 2016 software-related sales expectations from $600 million to ~$500 million due to lower BBM expectations. Also, the $500 million includes licensing revenue versus prior expectations not implying licensing revenue. Based on management’s fiscal 2016 growth expectations for the core EMM business, we believe BlackBerry faces the challenging task of selling not just EMM subscriptions but must also upsell increasing amounts of VAS and close additional technology licensing deals to meet its lowered fiscal 2016 targets. Further, we believe the continued steep decline in high margin services business and ongoing tepid hardware sales will remain a headwind to meaningful profitability during fiscal 2016/fiscal 2017.

Canaccord Genuity believes the company would need to close substantial additional technology licensing deals through fiscal 2016 to meet its lowered target. Given the lack of visibility into the cadence of these deals and whether these deals would have a recurring revenue component, the brokerage firm remains cautious on the long-term sustainability of this new licensing revenue.

A few other analysts weighed in on BlackBerry ahead of its earnings report:

  • Wells Fargo reiterated a Hold rating.
  • Morgan Stanley reiterated a Hold rating with a $7 price target.
  • RBC Capital reiterated a Hold rating with a $9 price target.

Shares of BlackBerry were down 0.9% at $7.11 on Thursday afternoon. The stock has a consensus analyst price target of $8.74 and a 52-week trading range of $6.41 to $12.63.