- BlackBerry's future continues to remain bleak.
- No turn-around yet seen for plummeting sales.
- BlackBerry is still not making a profit in spite of cost-cutting.
BlackBerry (NASDAQ:BBRY) is estimated to report earnings on Friday, September 25, 2015. This date is subject to change, since an official date for BlackBerry earnings has not yet been formally announced by management. Analysts are expecting earnings-per-share to come in at $-0.07 in this quarter's result, compared to $-0.02 in the same quarter last year.
Although the company has made improvements, they have yet to make a profit - they are still hemorrhaging cash. Losses of $5.8 billion two years ago were down to $304 million last year. Meanwhile, revenue fell 50% each year for the past two years. Gross profits have improved from cost-cutting, but that is unsustainable if sales continue to fall. So far, potential buyers have backed away from acquiring BlackBerry. Several analysts have voiced their expectations of a turnaround. However, there has been no turnaround for the company's plummeting sales, and there's no reason to believe that this BlackBerry earnings release will change things too much.
Formerly known as Research in Motion, BlackBerry has fallen from its heady days as leader in the smart phone industry. Crushed by competition from Apple and Google, BlackBerry has seen better days.
The company led the industry in the early to mid-2000's. Since then, however, Apple and Google have taken most of BlackBerry's market share. The stock price reflects their demise, now down more than 90% since their 2008 high of over $140/share. The stock currently trades at $7.50/share.
Apple introduced its first iphone in 2007. The chart below shows the effect on BlackBerry's stock in 2008, and thereafter.
For years, the company was run by co-chief executives, founder Mike Lazaridis and Jim Balsillie. After failing to turn the company around, they finally gave in to investors and resigned in 2012. COO Thorsten Heins took over as CEO, but lasted less than two years before being replaced by current CEO John Chen.
Chen is now approaching his two-year anniversary and appears to be steering the company in the right direction. Since taking over as CEO, Chen has implemented cost-cutting and is focusing on the company's biggest strength over Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) - BlackBerry security. President Obama and other local and federal government officials use BlackBerry for this reason. In addition, all G7 governments and 16 of 20 G20 governments use BlackBerry phones. Chen has picked up on this and seeks to expand BlackBerry's presence in enterprise mobility and security markets. More recently, the company leveraged its expertise in the area to join the National Cyber Security Alliance.
Morgan Stanley recently said that there is no evidence supporting a fundamental business turn-around. This is clearly the case so far. Cost-cutting is a good first step but can only go so far. If the company can't stop plummeting sales, it will either be acquired or go out of business. In spite of management's efforts, little evidence exists to show anything but lower sales revenue in the future.
Still, Chen has made enough improvements that the company may be able to return to profitability.... eventually. Maybe. At least the company appears to be headed for the only chance it has to remain a going-concern: capitalize on BlackBerry's security strengths.
The company is not likely to beat analyst estimates and if so, not by much. If BlackBerry can beat analyst estimates and the stock price climbs, it will likely be a temporary jump at best. This sentiment is also reflected in Amigobulls' BlackBerry stock analysis video. To sum up, don't play the turnaround till it's actually here.