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Bill Maurer
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I am a market enthusiast and part-time trader. I started writing for Seeking Alpha in 2011, and it has been a tremendous opportunity and learning experience. I have been interested in the markets since elementary school, and hope to pursue a career in the investment management industry. I have... More
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  • BlackBerry: The Floor Is Yours

    Later this week, we'll get the latest quarterly report from BlackBerry (NASDAQ:BBRY) when the company announces its fiscal Q4 results on Friday. Investors are looking to see if fiscal Q3 marked a revenue bottom. Newly launched phones are key to the company's top line number in the short term, but also driving software and service revenues in the long term. BlackBerry shares are towards the lower end of their recent range currently, as investors eagerly wait for this crucial report. Today, I'll take a look at where things stand for BlackBerry as earnings approach.

    Will Q3 mark a revenue bottom?

    When BlackBerry reported its latest results back in December, the company announced a large revenue miss. Management partially blamed some phone sales being pushed into Q4, but the top line number badly missed estimates. As a result, analyst estimates came down tremendously for the soon to be reported quarter. You can see in the table below the changes in analyst estimates over time.

    The current average estimate still represents a decline of about 18.5% over the year ago period. BlackBerry did surprise with an adjusted penny per share profit last quarter. The company has done a great job in recent quarters of beating on the bottom line, so investors are probably expecting a decent adjusted EPS figure. In terms of revenues, the key number will be $793 million, which we saw in Q3. Those that are bullish on this name in the long run want Q3 to mark a revenue bottom, and that's a key to this week's report. In the chart below, you can see some recent quarterly revenue numbers, with the two quarters in green being current estimates.

    Analysts expect a small sequential rise in Q4, with that momentum continuing a bit into fiscal Q1 of 2016. The key focus in the short term is how many of the new Passport and Classic phones were sold, and the average sale price overall. These new phones are expected to raise the company's ASP number a bit, helped by a smaller percentage of sales coming from older and cheaper legacy phones. Getting these key hardware revenues are a long term key for the company's software and service businesses, which BlackBerry is trying to grow substantially in upcoming years. If BlackBerry can show some decent hardware sales momentum in the short term, it will help set things up a bit going forward.

    One analyst recently threw a bit of cold water on the company's turnaround hopes. Wells Fargo believes that BlackBerry shares are fully valued going into earnings, based on the notion that quarterly revenues and performance are likely to "disappoint meaningfully". While street estimates call for quarterly revenues to rise slightly sequentially, Wells Fargo thinks we could see a nine percent decline. The firm thinks that Classic sales will be pushed forward into Q1. The analyst believes that capital expenditure cuts could lead to an EPS beat, but that this would not be material to the long term story. Wells Fargo sees the chance of a BlackBerry buyout being limited in the short term, and has a $9.50 to $10.50 fair value range for the stock.

    Investors are also looking forward to see if BlackBerry can show positive cash flow for the quarter. The company finished fiscal Q3 with about $3.1 billion in cash, against $1.66 billion of debt on the balance sheet. The company has slowed down its cash burn tremendously in recent quarters, and the hope is that cash flow will become positive again going forward. A solid balance sheet and decent cash balance are key for the company, as it gives the company flexibility to focus on growth efforts going forward. The Secusmart acquisition, which I'll focus on in the next section, is one example where BlackBerry was able to use its financial resources. Later this year, that acquisition may help the company with a new revenue source.

    Tablet effort, part 2:

    Recently, the company announced a new ultra-secure tablet which could go on sale this summer. For some, this news might sound odd given the company's struggles in the tablet market. However, BlackBerry should be applauded for its second foray into this space, because this new offering is a much better idea. The BlackBerry SecuTablet was launched in partnership with Samsung (OTC:SSNLF) and IBM (NYSE:IBM), and is based on Samsung's Galaxy Tab S 10.5 Android tablet. The device contains encryption and anti-eavesdropping technology developed by the German Secusmart unit, which BlackBerry acquired last year. Sales could start this summer, with the initial price being about $2,380.

    Those critical of the company will look at BlackBerry's first foray into the tablet space, the PlayBook. This was a spectacular failure for the company, and the unit has been discontinued. BlackBerry's tablet effort was so poor that former CEO Thorsten Heins stated back in 2013 that tablets would be irrelevant in five years. Perhaps that was a bit of sour grapes, given the company could not make any strides in this space. This second tablet effort for BlackBerry is much different, however. The SecuTablet is not expected to compete with a $99 children's tablet or a $500 iPad. This tablet is aimed at those with high-end security needs, enterprise and government clients in particular.

    Final thoughts:

    Recently, BlackBerry shares have been under a bit of pressure, with the latest leg down starting after a downgrade from Goldman Sachs. Shares have spent a large portion of the last six months between $9 and $11, as you will see in the chart below. With the stock declining below $10 again, the 50-day moving average line has started to head lower. If BlackBerry's report fails to satisfy, the 50-day line will definitely drop below the 200-day moving average.

    (click to enlarge)

    (Source: Yahoo! Finance)

    BlackBerry's fiscal Q4 report is nearly here, and the bulls are hoping that the company will report a sequential revenue increase. New phone sales are key for this period, and the second foray into the tablet space could help later this year. For the turnaround to enter its next stage, a revenue bottom must be put in. Lately, BlackBerry shares have been heading lower, which could set up a key technical crossover of the 50-day and 200-day moving averages. I'll return next week to analyze the company's report.

    Mar 25 3:11 PM | Link | 3 Comments
  • 5,000 Followers And Still Going Strong

    Recently, I hit an important milestone on Seeking Alpha, and that is 5,000 followers. My success here on the site is due to this loyal reader base, and I wouldn't be writing if it wasn't for all of the people that continue to not only read my articles, but comment on them, send me messages, etc.

    So today, I'm here to say thank you to all that have made this possible. Additionally, nearly 600 of my followers are following me in real-time, which is the fastest way to get my articles. I encourage more of you to follow me in real-time to get stuff quicker. Thanks again, and let's continue to get these numbers up.

    Oct 28 9:29 AM | Link | 1 Comment
  • For All ETF Investors: A New Way To Invest In Stock Splits

    If you are an investor that likes exchange traded funds, there is a new choice out there that I recently wrote about. It is called the US Stock Split Index ETF (NYSEARCA:TOFR). This ETF is geared towards names that have split their stocks by at least a 2 for 1 ratio. The theory is that over time, names that split their stocks do better than the market. For a more detailed analysis of this ETF, please read the linked article above. As of September 12th, the following is a list of holdings in the index, which I believe is a representation of what the ETF will hold.

    Copart Inc (NASDAQ:CPRT), Coca-Cola (NYSE:KO), CME Group (NASDAQ:CME), AZZ Inc (NYSE:AZZ), Tronox Limited (NYSE:TROX), Plains All American Pipelines (NYSE:PAA), Magellan Midstream Partners (NYSE:MMP), Stepan Co (NYSE:SCL), Holly Energy Partners (NYSE:HEP), ProAssurance (NYSE:PRA), Colgate-Palmolive (NYSE:CL), A.O. Smith (NYSE:AOS), Telus (NYSE:TU), Home Bancshares (NASDAQ:HOMB), American States Water (NYSE:AWR), Franklin Resources (NYSE:BEN), West Pharmaceutical Services (NYSE:WST), Tractor Supply (NASDAQ:TSCO), DaVita HealthCare Partners (NYSE:DVA), Canadian National Railway (NYSE:CNI), RLI Corp (NYSE:RLI), Toronto Dominion Bank (NYSE:TD), ITC Holdings (NYSE:ITC), Mueller Industries (NYSE:MLI), Allied World Assurance (NYSE:AWH), Apple (NASDAQ:AAPL), Union Pacific (NYSE:UNP), Open Text (NASDAQ:OTEX), Columbia Sportswear (NASDAQ:COLM), and Amphenol (NYSE:APH).

    Sep 20 11:32 AM | Link | Comment!
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