BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) will report F3Q13 results on December 20 before market open, and will hold a conference call at 8:00 AM EST.

Blackberry bbry

With the conclusion of the strategic review, focus now reverts back to the current restructuring that will see opex reduced by 50% by F1Q15. Despite this opex cut, analysts at Raymond James think profitability could remain elusive as BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) break-even becomes a moving target with further declines in its highly lucrative Services revenues.

BlackBerry’s Estimates

Analysts are lowering their estimates to $1.7 bln/($0.39) vs. consensus of $1.6 bln/($0.41) for BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB). they believe sell-through remained weak in F3Q compounded by enterprise subscriber losses given all the corporate distractions. Based on Gartner’s C3Q13 smartphone data, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s sell-through decline accelerated sequentially (-23% Q/Q in NA, -26% Q/Q in Europe and -31% Q/Q in Emerging Markets).

In an open letter to its enterprise customers recently, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) reiterated its focus on four key areas: Handsets, Enterprise Mobile Management (EMM); Cross-Platform Messaging; and Embedded Systems (QNX). What analysts will be watching for are:

1) Handsets – restructuring progress.

Analysts at research firm don’t believe the opex reduction is enough given the potential for further declines in BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) highly lucrative Services revenues. The recent investment from Fairfax and other investors added $1 bln to give BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) a bigger cash cushion (now $3.6 bln) for the coming transition. But the restructuring effort could cost another ~$300 mln and analysts still forecast operating losses to the tune of ~$500 mln over the next few quarters.

2) EMM – BES10 progress.

BES 10.2 was released last week with new features such as expanded multi-platform support and Secure Work Space container for iOS and Android. BlackBerry claims they now have 30,000 commercial and test server installations (Sept: 25,000; July 19,000);

3) BlackBerry’s BBM.

BlackBerry BBM

BBM finally launched cross platform on Oct 21, with 20+mln new active users in the first week (BBM now ~80 mln users vs. Kik at ~95 mln, Viber at ~200 mln, LINE at ~300 mln and Whatsapp at ~350 mln). A survey by Distimo since BlackBerry Ltd (NASDAQ:BBRY)’s BBM went cross-platform also shows BBM leading Whatsapp on iOS in the US, UK, and India, while Whatsapp held the edge in Brazil and South Africa (See Ex. 1). That’s good news for BBM’s valuation if they can continue to add users.

BlackBerry’s Valuation

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) currently trades at 0.1x C2014E EV/Sales and 0.5x C2014E EV/EBITDA.