BlackBerry Q3 2015: Will It Be A Turnaround?

  • BlackBerry is slated to report Q3 2015 earnings before the bell on Friday, December 19th.
  • On the back of its popular Passport smartphone launch, analysts expect BlackBerry to report an EPS of -$0.05 on a revenue of $937.41 million
  • The company needs to report a strong performance if it wants to convince investors of its turnaround.

BlackBerry Limited (BBRY) is slated to report Q3 2015 earnings before the bell on Friday, December 19th. BlackBerry, like Yahoo, the struggling search engine (See: Yahoo Q3 Earnings), is a shadow of its former self. The current quarter has been a much happening quarter for BlackBerry. Passport finally hit the market and has received a warm welcome from Blackberry users. It had also released a new Enterprise software platform BES 12 in November. While the company’s efforts have renewed a talk of turnaround, the company needs to post a strong performance to convince people about BlackBerry'c comeback. The company’s stock recently lost steam. After doubling from December 2013, it is down 13.8% in the last one month.

BBRY-stock-chart
Source: BlackBerry Stock Price Vs NASDAQ Composite by Amigobulls

Passport Drives Growth

Driven by better than expected reception of its flagship handset Passport, BlackBerry is also set to meet its revenue targets. Since its launch, Passport has consistently been out of stock in all major markets. While official figures of Passport sales is not available, analyst estimate sales figures to be around 870,000 units. However, huge success of iPhone 6, which was released around the same time, could have adversely affected Passport sales. To combat iPhone 6 sales, BlackBerry went on a promotion round offering iPhone users cash back up to $550 to trade in for Passport. While this promotion is likely to boost revenues in short term, many analysts see it as a desperate sales measure.

Blackberry to focus on Enterprise Solutions

The company has also released its new enterprise solution platform BES 12, though it is unlikely to affect the third quarter numbers as it was released towards the end of the quarter. The company has repeatedly emphasized that BlackBerry’s future lies in software and enterprise solutions. BlackBerry Enterprise solutions is likely to drive BlackBerry’s turnaround plan. Currently 46% of BlackBerry’s revenues is generated by services segment.

Blackberry had entered into several partnerships including the one with Samsung, to provide secure mobility solutions. This was with the aim of boosting its enterprise solutions platform. However, BlackBerry’s revenues from service activation fee (SAF) is likely to decline by 15% on sequential basis. This is driven by ongoing subscriber loss and lower average revenue per user (ARPU) due to margin negotiation with telecom carriers. Revenues from hardware needs to compensate for this decline.

Analyst Estimates and Earnings History

The company is expected to report an EPS of -$0.05 on a revenue of $937.41 million. The revenues represent a decline of 20.5% on YoY basis. The current EPS estimate has improved from -$0.16 two month ago, largely due to reported success of its new handset Passport. Blackberry has delivered an earnings surprise in the last three quarters.

BBRY-eps-chart
Source: BlackBerry EPS Chart by Amigobulls

Conclusion

For BlackBerry, a lot depends on the performance of Passport. The company needs to post a solid quarter to convince investors about its turnaround possibility. And, in the face of declining SAF revenues, only Passport can help BlackBerry deliver a strong quarter.

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Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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Comments on this article and BBRY stock

stocksman
bullish
The realistic hope blackberry has is that of an acquisition. They should get some value out of their patents and the secure mobile mail software.
1 reply
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AvW
bullish
Thanks for the article!!

@stocksman

Realistically, other hardware and software providers are going to be turning to BB more and more to support iterations of security and service, like Samsung and Ford just did. BB has the foundation for security, simplicity, innovation and application as the only company on the planet who can cross-support competitor platforms. Competition will slowly but surely become clients and this is a Win-Win for Blackberry. Therefore,more partnerships and not acquisition are in Blackberry's future.
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