BlackBerry Ltd (BBRY) 1Q Results To Reflect Continued Struggle In Stabilizing Revenue Generation

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BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) may struggle to maintain its revenue generation in the first quarter. While the company’s earnings results are expected to surpass Street analysts’ expectations. However, it will be the revenue generation that will be watched keenly by the investors, as well as, the Street analysts.

Hardware Sales

In the past, it was the hardware sales that helped BlackBerry Ltd (NASDAQ:BBRY) generate significant revenue. Now that the company enjoys less than a percentage of market share in the smartphone category, there will be no relief from hardware. However, the company’s CEO, John Chen, said that the focus has been shifted towards software from hardware.

Though the company launched fresh models, not much can be expected from them. Reports indicate that there were some favorable reviews for its Classic and Passport models. The Canadian firm may struggle to generate revenue from service access fees. That left software alone to contribute to revenue growth in the quarter. Software accounts for about 10% of the company’s total revenue. Chen has a stated goal to double Software Revenue each year. While the software segment would have witnessed YoY growth, it would not have been sufficient to compensate the loss of revenue suffered in other segments, at least yet.

Street Expectations

On average, Wall Street analysts’ expect BlackBerry Ltd (NASDAQ:BBRY) to suffer a loss of three cents a share and generate revenue of $683.65 million. The expectations indicate that the loss would be narrower while revenue dropped to $966.0 million from the year-ago period.

In the fourth quarter, the company generated revenue of $660 million which included unfavorable impact of $12 million from the currency fluctuation. The company earned net income of $28 million or five cents a share. On an adjusted basis, its earnings were four cents a share for the fourth quarter. Most importantly, the company could generate normalized positive cash flow of $76 million.

Brokerage Views

RBC Capital Market expects the company to generate revenue of approximately $487 million in the first quarter. That meant a YoY drop of 49.6% and QoQ fall of 26.2%. Also, the brokerage estimate is 28.8% lower than Street’s consensus estimate. RBC expects the company to sell 700,000 devices suggesting a QoQ fall of 46% and YOY drop of 56%.

The brokerage also expects the company to have spent operating expenses of $305 million in the first quarter. RBC estimates a loss of seven cents a share for the first quarter. The brokerage believes that BlackBerry Ltd (NASDAQ:BBRY)’s software unit to pick up the steam in future. Accordingly, the company would have been generated revenue of $70 million in the first quarter, which will more than double to $145 million in the third quarter. The company will report its numbers on Tuesday after the bell.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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