BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) will come out with its fourth earnings this Friday, before the market opens. Cormark Securities Inc. analysts (Richard Tse and Andrew McGee), in a report released on March 24, 2014, expect continued decline in the core business, and estimate revenue of $0.9 billion compared to the consensus estimate of $1.1 billion while EPS is expected at -$0.78 versus consensus estimate of -$0.53.

BlackBerry

Investors pushing shares higher

Despite the decline in core business, analysts note that the investors have pushed the share price above 23% since the start of year, expecting another turnaround. Based on this, analysts believe that “newsflow and non-operating changes” like a recovering balance sheet will continue to push the sentiment, which could take BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) shares even higher in the short term. However, the prospects of a turnaround are still “a long way off,” note analysts.

Analysts have upgraded BlackBerry to a Buy from Market Perform, and have raised the price target from $7.50 to $11.50 owing to the short term drivers.

BlackBerry’s turnaround strategy includes measures like parting with negative margin hardware business, introducing measures to lower the cost, generating cash by selling assets, and reinvestment in the targeted growth businesses. The Canadian firm has acted on all of these fronts by outsourcing its hardware business to Foxconn, and selling real estate with the pending sale of the majority of its real estate holdings in Canada.

Declining market share a major problem for BlackBerry turnaround

Based on the above measures, analysts believe that the first quarter results would reflect continued progress in strengthening the balance sheet, which could improve further by a potential tax refund that could “add up to another $1-2 per share in cash,” believe analysts.

However, analysts note that the only missing thing is “the results of these actions when it comes to the business model of BlackBerry going forward.” BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s operating system market share has fallen to only 0.6% in the fourth quarter of 2013 compared to 3.2%, in the same period last year. For the same quarter, marker share of Android have jumped to 78.1% from 70.3% previously, according to data from IDC. Declining market share of the Canadian firm “underscores the risk to this potential turnaround,” believe analysts.

Overall, analysts say that positive benefits of the non-operating measures would help BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) to deploy a turnaround, but turning to its “business model beyond these near-term actions, we are less enthusiastic.”