BlackBerry (NASDAQ:BBRY) reports its fourth quarter Friday morning. This will be the first quarter with a full three months of sales of BlackBerry's new Android (NASDAQ:GOOG) (NASDAQ:GOOGL) phone. A key question for some investors is whether BlackBerry can make hardware a profitable segment or will the company exit hardware altogether. This quarter should give some insight into that question.
That datum doesn't give us a lot of insight, but it does suggest that total sales of the new BlackBerry Priv since its launch late last fall have been at least 100,000 units. I have seen quite a few Priv's around town in Collingwood, Ontario, where I ski, and word of mouth commentary is overwhelmingly positive. That makes me think sales might surprise to the upside a bit.
In total, I am guessing BlackBerry sold 750,000 devices in the quarter at an average price (brought up by the higher average selling price of the Priv) of about $325, bringing hardware sales to about $240 million.
Service access fees on older BlackBerry models are fading away and I am guessing they will come in at around $140 million. Software sales will benefit from the acquisition of Good Technology and I think a number of $135 million is in the ballpark of sensibility.
Research and development expenses of $100 million and selling, general and administrative expenses of $175 million put EBITDA for BlackBerry at $13.7 million - head above water but not by much.
If I am anywhere close, the results are unlikely to move the stock barring a surprise in guidance.
I am optimistic that the BlackBerry brand has value and the move to Android OS devices can be profitable. I will be disappointed if CEO John Chen decides to dump the hardware division.
At this point, I am neutral on BBRY stock short term, but positive longer term as profits shift to software with the possibility of modest hardware growth on Android OS platform devices.
*Image Source: BlackBerry
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