Return to enterprise roots
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) has sharpened its focus on four key areas, which analysts at Baird applaud. However, they fear it still faces an uphill battle in devices, with potential revenue from BES10 and software/services also uncertain. Lowering their estimates further following a weaker FQ3. Analysts highlight the roughly $4 per share in net cash, though note cash burn could continue through the next year. Reiterate firm’s Neutral rating with a $7 target price.
BlackBerry Guidance highlights
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) plans to focus on four key pillars: Enterprise (BES10), BBM (investment mode), QNX (auto + new areas) and Devices (via new Foxconn Technology Co., Ltd. (TPE:2354) partnership).
Foxconn outsourcing positive
Still in the enterprise device game
However, it plans to continue producing enterprise-grade devices for developed markets, an area of intense competition, to help sustain its software and services opportunity.
BES10 trajectory unclear
BBM in investment mode
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) ended FQ3 with $3.2 billion of cash and equivalents or close to $4 per share of net cash, though analysts expect continued cash burn through the next year. The company appears to have burned close to $700 million of cash in the quarter.
FQ4. Lowering revenue and smartphone shipments from $1.19 billion and 2.0 million to $1.03 billion and 1.65 million.
FY’15. Lowering revenue and smartphone shipments from $4.4 billion and 7.7 million to $3.6 billion and 7.2 million.
BlackBerry Valuation update
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is currently trading at 0.7x our FY’15 revenue forecast vs. the peer group at 0.3-1.0x. Analysts’ revised $7 target price is based on 0.7x our FY’15 revenue forecast.
Revenue and smartphone shipments of $1.2 billion and 1.9 million missed analysts’ $1.3 billion and 2.4 million forecasts and consensus of $1.7 billion and 3.6 million.