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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?
Fri, Dec. 19, 2:43 PM
- Deja vu: Three months after gradually moving higher after posting an FQ2 revenue miss and EPS beat, BlackBerry (BBRY -1.4%) is doing the same after delivering a similar FQ3 performance.
- An improving gross margin contributed to the EPS beat: GM rose to 51.7% from 46.4% in FQ2. GM was at -106% a year ago (the result of a massive phone inventory charge).
- Cost cuts also helped: GAAP R&D spend fell 17% Q/Q and 48% Y/Y to $154M; SG&A spend fell 12% Q/Q and 68% Y/Y to $538M. BlackBerry "continues to target sustainable non-GAAP profitability some time in fiscal 2016." The FY16 (ends Feb. '16) EPS consensus is at -$0.20.
- Hardware was 46% of revenue, services 46%, and software/other 8% - the same as FQ2. End-user phone sales fell to 1.9M from 2.4M in FQ2 and 4.3M a year earlier. BlackBerry has said it needs to sell 10M phones annually to break even on hardware.
- Cowen (Market Perform) likes BlackBerry's margin improvement and BES license growth - ahead of the BES12 launch, BES10 licenses roughly doubled Q/Q to 6.8M, aided by the EZ Pass migration program (to be ended soon). "Software growth remains the critical driver of the long-term turnaround."
- S&P (Hold): "We are encouraged by a return to positive cash flow, reflecting margin improvement from cost cutting efforts. We see BBRY growing its mobile device management business ... We anticipate BBRY focusing on growing its software offerings and expect its hardware business to remain at depressed levels." MDM software rival MobileIron (MOBL +6.6%) is up strongly.
- FQ3 results, details
Fri, Dec. 19, 7:39 AM
- FQ3 non-GAAP EPS of $0.01 vs. a loss of $0.02 the previous quarter.
- Normalized positive cash flow of $43M vs. cash use of $36M previously.
- No details on how the Passport is faring, but hardware revenue was about $365M, down 12% Q/Q. The company recognized hardware revenue on about 2M units, suggesting an ASP of roughly $182, down 27% Y/Y. 1.9M phones were sold through to end customers.
- Conference call at 8 ET
- Previously: BlackBerry beats by $0.06, misses on revenue
- BBRY -4.7% premarket
Fri, Dec. 19, 7:02 AM
Thu, Dec. 18, 5:30 PM
Fri, Nov. 14, 9:40 AM
- During an investor day (transcript) held yesterday afternoon following its enterprise announcements, BlackBerry (BBRY -0.2%) guided for FY16 (ends Feb. '16) services revenue of $800M, down 50% from an expected FY15 level of $1.6B. The company's total FY16 revenue consensus is currently at $3.78B (nearly flat Y/Y),
- As it is, services revenue has been dropping due to consumer fee cuts, hardware installed based declines, and enterprise promotions. Services was 46% of August quarter revenue, down from 54% a year earlier; BlackBerry's total revenue fell 42% during this time.
- BlackBerry is counting on hardware stabilization and software growth to help offset the services decline; software revenue is expected to double in FY16 to $500M. Long-term, it hopes newer enterprise services (such as those announced yesterday) and Project Ion will boost services revenue.
- Raymond James' Steven Li (Market Perform) notes the FY16 services guidance was below the firm's estimate of $1.14B, and "reduces the margin for error on BBRY’s target of doubling software revenues next year to offset the [services] decline and maintain cash flow breakeven." He also thinks an FQ3 revenue consensus of $965M remains too high; RJ forecasts $899M.
- On the other hand, Li declares the Samsung deal bolsters BES12's credibility as a cross-platform enterprise mobility management (EMM) solution. He's also pleased with John Chen's disclosure than a Fortune 10 client plans to use BES12 to manage non-BlackBerry devices; "almost all" of BlackBerry's initial 100+ BES12 deployments are believed to be for managing BlackBerrys.
- Shares are near breakeven in early trading. They rose 7% yesterday.
- Update (2:35PM ET): Shares are now down 6.4%.
Fri, Sep. 26, 10:18 AM
- Down initially following its mixed FQ2 results, BlackBerry (NASDAQ:BBRY) has quickly reversed course.
- Possibly helping: John Chen has forecast BlackBerry's software revenue (aided by the upcoming BES 12 launch, and perhaps also QNX and Secusmart), will double in FY16 from an expected FY15 level of $250M. Software/other sales were 8% of revenue in FQ2.
- Chen also states BlackBerry has sold 200K Passport phones since the device's Wednesday launch. End-user phone sales were an estimated 2.4M during FQ2.
- RBC's Mark Sue (Market Perform) notes services revenue (-19% Q/Q to $421M) was below his $453M estimate, and thinks the number is "likely to sustain concerns about BlackBerry’s declining subscriber base." However, phone shipments of 2.1M were above RBC's 1.65M forecast.
- Cowen's Tim Arcuri (Market Perform) calls BlackBerry's 47.5% gross margin "solid," At the same time, he argues "investor concerns are increasingly likely to key on how/when new technology and growth initiatives can/will arrest the Service decline and deliver a revenue inflection beyond Hardware."
- FQ2 results, details.
Fri, Sep. 26, 9:30 AM
- BlackBerry's (NASDAQ:BBRY) R&D spend fell 22% Q/Q and 48% Y/Y to $186M in FQ2, and its sales, marketing, and admin spend fell 51% Q/Q and 63% Y/Y to $195M. That helped EPS beat estimates in spite of a revenue miss.
- Also helping: Though BlackBerry's revenue fell by $50M Q/Q and its mix shifted towards hardware (lower-margin) relative to services, adjusted gross margin only fell by 50 bps to 47.5%. Hardware GM was positive.
- Hardware was 46% of revenue, services 46%, and software/other 8%. That compares with a 39%/54%/7% split in FQ1.
- Revenue was recognized on 2.1M phone shipments (up from FQ1's 1.6M), and an estimated 2.4M phones were sold to end-users (down from FQ1's 2.6M). Shipments were at 3.7M a year ago, and end-user sales 5.9M.
- North American revenue -28% Y/Y to $297M; EMEA -44% to $368M; Latin America -43% to $111M; Asia-Pac -49% to $140M.
- BBM users rose by 6M Q/Q to 91M. They were at ~60M before Android/iOS apps arrived last year.
- BlackBerry still expects to achieve breakeven cash flow by the end of FY15 (ends Feb. '15).
- FQ2 results, PR
Fri, Sep. 26, 7:01 AM
Thu, Sep. 25, 5:30 PM
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, 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.
Thu, Jun. 19, 7:02 AM
Wed, Jun. 18, 5:30 PM
Fri, Mar. 28, 2:05 PM
- Initially up sharply following after posting a big FQ4 EPS beat to go with an (also large) revenue miss, BlackBerry (BBRY -2.2%) has reversed course.
- Analysts are worried the cost cuts that drove the EPS beat - R&D/SG&A spend fell 34% Y/Y to $601M - will only do so much. "John Chen did what John Chen is known for. He came in and he's cut the cost base," says BGC's Colin Gillis.
- On the CC, Chen said BlackBerry plans to re-launch BB7-based Bold phones that have seen strong demand. He also stated three new high-end QWERTY BlackBerrys would likely arrive in the next 18 months. "I hope nobody thinks we don’t take seriously the handset business."
- Sales of the high-end/QWERTY Q10 fell flat last year, as the iPhone and Samsung's Galaxy line continued dominating the high-end. BlackBerry recently unveiled the Q20, a new QWERTY flagship.
- Chen also reiterated BlackBerry aims to be profitable in FY16 (ends Feb. '16), and said the company will "take a very serious look" at bringing BBM to PCs. BBM's active user base has surged past 85M since Android/iOS apps launched last fall.
- 3.4M BlackBerrys were sold to end-users in FQ4, down from 4.3M in FQ3 and 5.9M in FQ2. Due to inventory-clearing, BlackBerry only recognized revenue on 1.3M shipments.
- Previous: BlackBerry's results, details
Fri, Mar. 28, 7:35 AM
Fri, Mar. 28, 7:02 AM
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