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Update: BlackBerry Earnings, Healthcare Business Has Huge Growth Prospects
- BlackBerry returns to non-GAAP profitability during the fiscal 2015 third quarter.
- In a previous article, we said BlackBerry's entry into mHealth is an encouraging development for investors.
- CEO John Chen said that the company has expanded its ecosystem to embed some of its solutions on the human genome and cancer research projects.
- Since things are panning out as we expected on the mHealth front, we continue to remain bullish on the stock.
Is BlackBerry Really Working With Boeing On A Self-Destructing Phone?
- Reuters reports “BlackBerry works with Boeing on phone that self-destructs”.
- The internet comes alive with the story.
- KIA Investment Research contacts Boeing for the real story.
- BlackBerry reported non-GAAP profitability for the first time since Q4 2013.
- Lowered operating expenses and positive hardware gross margins make it much more likely that BlackBerry can maintain profitability this time around.
- Profitability should be attainable in Q4 2015 with around 400,000 to 500,000 Passport and Classic units recognized as revenue, along with 1.5 million other BlackBerry units.
Taking The Long-Term View On BlackBerry's Latest Quarterly Results
- The 34% Y/Y decline in revenue is a big negative, but Chen and his management are on track to meet their own goals.
- Many positives are easily overlooked, including cash flow positive, balance sheet flexibility and new products and partnerships, which laid the seeds for future growth.
- Chen is 99% confident, compared to 80% in June, that a turnaround will be successful. Given his execution track record at Sybase and BlackBerry, I don't think he's bluffing.
- Long- term investors are in the best position to benefit. They can enjoy any share gains while taking advantage of declines to buy.
BlackBerry: A Buy Despite Some Uncertainty In FY 2016
- BlackBerry's Q3 FY 2015 revenue fell short of estimates.
- BlackBerry will offset some of the decline in service revenue with software in FY 2016.
- Handset shipments might not necessarily reach the 10 million target.
- However, higher value devices may offset lower shipment figures, which will allow for profitability at the end of FY 2015.
BlackBerry Posts Surprise Profit, Weak Revenues Remain A Concern
- BlackBerry posted a surprise quarterly profit on the back of better cost management, although its top line missed consensus by a wide margin due to disappointing handset sales.
- Over the last year, the company has made progress in restructuring its business by lowering headcount and reining in costs, while also reworking its hardware and software strategy.
- BlackBerry still remains a company in transition.
- Recent news indicates BlackBerry on the right track headed into 2015.
- Boeing collaborating with BlackBerry.
- MobileIron loses customers to BlackBerry.
- It remains to be seen if new customer wins will impact BlackBerry's market share.
- BlackBerry beats Wall Street earnings estimates for the fourth time in a year, but revenue missed badly.
- The market responded with an initial sell-off, but the stock rebounded forcefully with huge volume - five times a normal day.
- Who should investors trust - analysts, BBRY CEO John Chen or Mr. Market?
- BlackBerry beat on EPS due to margin improvements and efficiencies, but missed big on revenue.
- This still represents progress for the company, which recognized positive FCF of $43M.
- BlackBerry's going to be just fine.
BlackBerry Ekes Out A Profit Despite Sales Tanking
- BlackBerry revenues fell sharply.
- Passport sales recognized less than the 200,000 initial orders.
- Classic demand higher than Passport according to CEO Chen.
- Service access fees falling 13% quarter over quarter but software is growing.
- In the result, Q4 should show a profit with the real test in fiscal 2016.
- BlackBerry's fiscal 2015 Q3 results contained a 33% y/y decline in total revenue, a 42% y/y decline in Service revenue, and a 23% y/y decline in Hardware revenue.
- The steep declines in revenue confirm the continuing collapse of the BlackBerry ecosystem.
- The steepest decline in Service revenue demonstrates BlackBerry is waning even in the enterprise.
- BlackBerry continues to be a short opportunity.
- The company has two new phones, and they're highly differentiated.
- BlackBerry's emphasis on security should pay off.
- Even if BlackBerry's new smartphones fail to spark revenue growth, the company is working on software and partnership deals which are tangential to its own device business.
- Friday the Estimize community is projecting a loss of 3 cents per share and $992 million in revenue.
- BlackBerry introduced the BlackBerry Classic device to cater to loyal users.
- The device is an improvement compared with the prior models but unlikely to move the needle given its niche focus.
- Short BBRY ahead of Friday's result.
BlackBerry Likely To Post Loss In Third Quarter But Focuses On Long Term Turnaround
- BlackBerry devices Passport sales have increased to 5.4% in the month of November. Z3 sales amounted to 4.4%. Revenues could improve in Q3.
- Analysts at Wall Street are expecting that the company will post a loss of $0.05 per share, with revenues of $959.54 million for the third quarter.
- The launch of ‘The Classic’ and the response received by it indicated that BlackBerry has been successful to some extent in reviving its smartphone segment, following a tweak in strategies.
- Software segment will possibly improve in the future as the company could post non-GAAP profits by FY2016. Cash flows are expected to break even by the end of FY15.
- The outlook in the latest earnings release will provide a better picture about the direction in which the company is heading in.
BlackBerry: Buy Downside Protection As Analysts Grow Cautious
- BlackBerry reports fiscal Q3 results on Friday.
- Incremental sales from the Passport could be muted by declining service revenue.
- I advise investors to remain bullish long-term, but buy downside protection "just in case".
- BlackBerry finds an interloper on its home turf of security and privacy.
- Blackphone announces a privacy-focused app store and device sandboxes will be available in early 2015.
- The Blackphone offers granular permissions management for apps, with secure voice and text messaging.
- BlackBerry strikes back at newcomer Blackphone.
- Are Blackphones selling?
Tue, Aug. 5, 10:27 AM
- "We have completed the restructuring notification process, and the workforce reduction that began three years ago is now behind us," says John Chen (BBRY +4.4%) in a memo picked up by Reuters.
- He adds BlackBerry plans to grow headcount "in certain areas such as product development, sales and customer service, beginning in modest numbers." Chen once more expresses confidence the company will be cash flow positive by the end of FY15 (ends Feb. '15).
- Chen's remarks arrive 11 months after BlackBerry launched a giant restructuring that involved cutting 4.5K jobs. Overall, headcount has fallen by ~60% over the last 3 years.
- 92.9M shares (19% of the float) remained shorted as of July 15.
- Prior remarks from Chen: I, II, III
Tue, Jul. 29, 10:47 AM
- BlackBerry (BBRY -0.7%) is acquiring Secusmart, a German developer of mobile encryption and anti-eavesdropping tech. Terms are undisclosed.
- Secusmart already offers a mobile security platform (called SecuSUITE) for BB10. Its solution relies heavily on a secure microSD card with a built-in encryption co-processor and crypto-controller.
- BlackBerry notes the companies have partnered to provide "Secusmart-equipped BlackBerry smartphones to a significant number of German government agencies and almost all German government ministries and leaders, including Chancellor Angela Merkel."
- The purchase comes amid an uproar in Germany over NSA spying activity, one that has even led the country's NSA inquiry chief to suggest using typewriters to avoid eavesdropping. Yesterday, the German government was reported to be interested in buying 20K more BB10 phones for security reasons.
- BlackBerry also sees opportunities to bring Secusmart's offerings to other markets. John Chen has shown an interest in carving out niches for BB10 phones in enterprise/government verticals with special requirements.
Mon, Jul. 28, 1:46 PM
- John Chen, during a Bloomberg interview: "I don't have any offers on my desk ... If people would like to talk, I mean, talk is not an offer." (video)
- BlackBerry (BBRY -2.8%) performed a strategic review last year, during which the rumor mill produced a long list of potential/would-be suitors. But the company abandoned its efforts to find a buyer in November in favor of a turnaround effort spearheaded by Chen.
- Chen reiterates today he has no problem with staying independent. "I am comfortable with where the company is today, how we managed our technology, our businesses, the margins, the distribution channel or the new products that's coming out ... Whether it's going to be good enough to be iconic again, OK, that's something I need to chew on."
- Last week: BlackBerry rallies after Chen talks partnership efforts
Thu, Jul. 24, 12:33 PM
- BlackBerry (BBRY +4.2%) is talking with other tech companies about partnerships in the wake of the Apple-IBM deal, John Chen tells the FT. "I am working on some, and maybe we will collaborate with others. If I focus on security and identity management then we will be a good solid partner."
- Chen compared the Apple/IBM tie-up to two elephants dancing, and promised BlackBerry would be more nimble. He also talks up BlackBerry's long-term enterprise strategy. "What we are doing is focusing on security and privacy, which is where all the things are connected. Every IT device – no matter what operating system – we want to talk to and connect securely."
- BlackBerry tumbled after the Apple/IBM deal was announced, as a slew of analysts argued the alliance is a negative for BlackBerry's MDM and/or enterprise hardware efforts.
Mon, Jul. 21, 9:15 AM
- BlackBerry (NASDAQ:BBRY) has hired Marty Beard, until recently the CEO of cloud contact center software firm LiveOps, to be its COO. The COO position has been vacant at the company since Kristian Tear left last fall, soon after John Chen was named CEO.
- Like BlackBerry's recently-hired sales, enterprise services, and corporate development chiefs (previous), Beard once worked for Chen at SAP-acquired Sybase: He was president of the company's Sybase 365 (mobile messaging/commerce) unit from 2006-2011. Prior to that, he worked for Oracle.
Wed, Jul. 16, 2:50 PM
- "Even if Apple-IBM's security 'mousetrap' isn't as good as ones offered by BlackBerry (BBRY -11%) and others, these MDM vendors will have to overcome the extremely high hurdle of displacing IBM's mobile device software preloaded on iPhones and iPads," writes Morningstar's Brian Colello, taking a critical view of the Apple/IBM deal's impact on BlackBery and MobileIron (MOBL -6.9%).
- IDC's John Jackson: "It is not a crushing blow at this early stage, but it is a negative for BlackBerry." UBS' Amitabh Passi asserts the deal highlights the intense competitive environment for MDM solutions, one that also features VMware, Citrix, and several other firms. Baird suggests the tie-up could also hurt BlackBerry's hardware sales by making iOS "the preferred platform in the enterprise."
- SA author Quoth the Raven defended BlackBerry this morning, arguing the deal makes the company a more compelling buyout target. BlackBerry, for its part, has responded by stating the deal "underscores the need" for solutions such as the kind "BlackBerry has delivered for years."
- More Apple/IBM commentary
Wed, Jul. 16, 12:37 PM
Tue, Jul. 15, 5:35 PM
Tue, Jul. 15, 4:50 PM
- As part of a comprehensive enterprise mobility partnership, Apple (NASDAQ:AAPL) and IBM plan to develop 100+ "industry-specific enterprise solutions," including new iPhone/iPad apps.
- The apps will begin to arrive this fall, and IBM will resell iPhones/iPads containing them to clients worldwide.
- The companies also plan to develop IBM cloud services optimized for iOS. Targeted markets include security, mobile device management (MDM), and big data/analytics. New enterprise-focused AppleCare services will be offered, as will "new packaged offerings from IBM for device activation, supply and management."
- Apple, which maintains an outsized share of enterprise mobile hardware activations, has tried hard to grow its business footprint during the Tim Cook era. Aside from any value provided by the new apps/services, Big Blue's credibility and relationships with Global 2000 firms should provide a shot in the arm for Apple's efforts.
- As for IBM, the deal adds to a mobile software/services push that has already resulted in a string of acquisitions and product launches.
- AAPL +1.4% AH. IBM +2%. BlackBerry (NASDAQ:BBRY) -3.2%, as investors worry about the MDM portion of the alliance. MobileIron (NASDAQ:MOBL) could also be affected by it.
- Update: Tim Cook, discussing the deal with re/code: "We’re good at building a simple experience and in building devices ... The kind of deep industry expertise you would need to really transform the enterprise isn’t in our DNA. But it is in IBM’s."
Mon, Jul. 7, 2:35 PM
- BlackBerry (BBRY +6.4%) is at levels last seen prior to its giant Sep. 2013 warning. With 1/5 of the float shorted as of June 13, short-covering is undoubtedly a factor.
- Also possibly helping: A report from the Economic Times stating BlackBerrry plans to launch a healthcare service that will rely on data from thousands of medical devices to "enable early detection of illnesses." A BlackBerry exec says the company is "running trials with multiple hospitals in India."
- The service is being launched in partnership with NantHealth, developer of a clinical software platform used by ~250 hospitals and connected to 16K+ medical devices. BlackBerry disclosed a stake in NantHealth in April, along with plans to offer a healthcare-optimized smartphone (among other things).
- Citron Research recently talked up BlackBerry's efforts to provide an OS (QNX) and analytics infrastructure (Project Ion) for companies looking to obtain insights from the data produced by embedded devices.
Mon, Jun. 30, 1:43 PM
- Leaked pictures of BlackBerry's (BBRY +4.8%) anticipated Passport phone show a rectangular device with an abbreviated QWERTY keyboard.
- The enterprise-focused device reportedly features a 4.5", 1440x1440, display (1:1 aspect ratio), 32GB of storage, 3GB of RAM, and a hefty 3450mAh battery.
- John Chen recently announced the Passport would launch in September. The leaks come two weeks after BlackBerry announced (in a strategy shift) Amazon's Appstore for Android would be integrated with BlackBerry 10.3 (due this fall), and that it'll work with BlackBerry developers to migrate their apps to the Appstore.
Mon, Jun. 23, 10:43 AM
- Evercore's Mark McKechnie has upgraded BlackBerry (BBRY +2.1%) to Equal Weight, and hiked his PT by $4 to $10.
- McKechnie is pleased with BlackBerry's "stabilizing cash burn." He's also optimistic about BlackBerry's efforts to hold onto its core base with the help of its EZ Pass licensing program (offers incentives to get companies to use BES10 to manage multiple platforms) and BES12.
- BlackBerry promises BES12 (due in November) will offer better multi-platform support and service management tools, and will also support cloud deployment options to go with traditional on-premise installations.
- Shares now +21% since the FQ1 beat, with an assist from Citron Research.
Fri, Jun. 20, 11:21 AM
- Citron Research, which set a $15 target for BlackBerry (BBRY +4.3%) in January, has hiked its PT to $20.
- In a new report (.pdf), Citron gushes (somewhat ironically, given its reputation for throwing cold water on hyped tech trends) over BlackBerry's potential to provide software and services to help enable the proverbial Internet of Things (IoT).
- Citron notes BlackBerry's Project Ion aims to provide an analytics infrastructure for businesses trying to leverage the data produced by millions of embedded devices, and that its QNX OS already makes it a player in the embedded market. It also sees BlackBerry's security reputation helping its cause.
- The firm calls John Chen "one of the strongest and most credible leaders on Wall Street," and thinks a tech giant could be interested in making a bid.
- Shares now +14% since yesterday's FQ1 beat.
- Yesterday's coverage
Thu, Jun. 19, 2:15 PM
- "The short trade is over in this name for now - for now," says BGC's Colin Gillis after taking stock of BlackBerry's (BBRY +11.2%) FQ1 numbers. "They've got enough liquidity, (and) they've given us clear profitability targets."
- Cowen's Timothy Arcuri likes the bottom-line improvement, as well as BlackBerry's gross margin expansion and better-than-expected services numbers. "We still see BES 12 transition as the key to sustained LT growth, but current momentum will certainly resonate with investors."
- Services revenue, affected by BB10-related consumer price cuts, fell to 54% of revenue in FQ1 from 56% in FQ4. Hardware rose to 39% from 37%, and software/other was steady at 7%.
- On the CC, John Chen mentioned early sales of BlackBerry's $200 Z3 phone (5", touch-only, launched in Indonesia) have been strong, and that inventory has run low at times. FQ1 end-user phone purchases of 2.6M were down from FQ4's 3.4M and FQ3's 4.3M.
- Job cuts at work: SG&A spend fell 41% Y/Y to $400M, and R&D spend 34% to $237M. 19% of the float was shorted as of May 30.
- Earlier: FQ1 results, details
Thu, Jun. 19, 9:11 AM
Thu, Jun. 19, 7:30 AM
- FQ1 revenue of $966M slipped 1% from the previous quarter. Breakdown: 39% hardware, 54% services, 7% software and other. Hardware revenue recognized on about 1.6M smartphones, up from 1.3M the previous quarter.
- About 2.6M phones sold to end customers during Q.
- Adjusted gross margin of 48% gains 500 basis points from FQ4.
- Cash on hand rises to $3.1B from $2.7B, boosted by a tax refund and sale of real estate. Excluding those, company burned through $255M in FQ1, down from $784M previously. Management expects break-even cash flow by the end of fiscal 2015.
- Previously: BlackBerry beats by $0.15, beats on revenue
- BBRY +9.8% premarket
- CC begins at 8 ET.
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