Analysts at Jefferies raise their cash flow estimates to account for the reported items but lower their EPS
to align the diluted share count with how BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is accounting for the convert.

BlackBerry

BlackBerry 6-K Key Points:

Post-earnings BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) released a 6-K with additional details. FQ3 benefited from a ~$700M tax refund, which led to much better than expected OCF of -$67M (analysts had est -$752M). Also, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) expects OCF to be helped by another $323M tax refund in H1:FY15 and $192M in land/equipment sales in the next 12 months.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) expects receipt of another significant income tax refund in H1:FY15. The current income taxes receivable balance is $323M. In the next 12 months, the company plans to sell $118M of real estate (out of $633M total) and $43M of equipment as indicated by its assets held for sale balance. The company’s amortization of identified intangible assets estimate for FY15 is $268M, which is lower than analysts’ FY14 estimate of ~$650M (assuming ~50% of D&A is amortization). Net/net analysts tweak their FY15 FCF estimate up from a cash burn of $719M to $419M.

Other highlights from the 6-K:

1) All BB10 handsets now recognized on a sell-through basis. 2) ~20% of the subscriber user base are enterprise users. 3) “The Company also made the decision to cancel plans to launch two devices to mitigate the identified inventory risk.” 4) Intangible asset amortization ex write-offs is expected to be $268M for FY15, $259M for FY16, $233M for FY17, and $156M for FY18. 5) As of 11/30, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) was using $5M of its $525M revolver. 6) “The Company expects shipments of devices to continue to decline until it is able to realize the anticipated benefits of its new partnership with Foxconn.” 7) $25M tax charge in FQ3 due to cash repatriation. 8) Purchase obligations and commitments $4.678B ($4.677B within one year) vs. analysts’ NTM hardware COGS estimate of $2.4B). 9) Services ARPU decline. “The year-over-year decrease also resulted from a continued shift in the mix of the Company’s customers from higher-tiered unlimited plans to prepaid and lower-tiered plans as well as pricing reduction programs implemented by the Company to maintain the customer base.”

Risks

Based on analysts’ FY15 estimates, research firm’s $6 price target is 0.3x EV/revs, below peers’ CY14 mean of 0.7x. Risks: 1) BB10 fails; 2) current subscriber base declines more quickly than expected;
3) lack of acquisition interest