BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is scheduled to release its second-quarter fiscal 2015 financial results on Friday, September 26. Analysts at RBC Capital Markets forecasted that the company will post losses in line with expectations,but its sales will miss consensus estimates.
Analysts’ earnings estimate
RBC Capital Markets analyst, Mar Sue and his team, estimated that BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) will report $908 million in sales, lower than the $943 million consensus estimate for the second-quarter.
The analysts also forecasted that the Canadian smartphone manufacturer will post losses of $0.16 per share, in line with the expectations of analysts.
Sue and his team also projected that BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) will report a 3% increase in smartphone sales to 1.65 million units during the period. In May, the Z3 model was sold out during its first day in Jakarta, Indonesia. The analysts noted that the BlackBerry Z3 helped boost the company’s hardware margins.
On the other hand, the analysts said the other devices (BB7 and BB10) of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) have been headwinds to its profitability over the past year.
The Canadian smartphone manufacturer previously indicated that it is getting closer to generate a break-even profitability in handsets. The company also expected that it will be able to generate profit from its handsets sometime in 2016.
Sue and his fellow analysts noted that the company continues to burn through channel inventory. However, they think it would stabilize next quarter and may expand after the launching of the Passport and Classic smartphones, which will be launched this September and November, respectively.
BlackBerry Ltd moving closer to cash flow brea-keven
The analysts noted that BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is moving closer to achieving a break-even cash flow. Sue and his team estimated that the company may sustain a cash opex of $400 million per quarter, which suggests a cash flow break-even at >45% GMs on revenues of $950 million per quarter.
“Our outlook calls for negative OCF in F2Q/F3Q on working capital build for new product launches (Passport, Classic), before reaching cash flow breakeven F4Q,” according to the analysts.
They estimated that BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) will generate $60 million proceeds from the sale of its real estate in the second-quarter. They also expected lower IP payments to help reduce its cash burn.
BlackBerry Ltd’s potential revenue stream
In addition, Sue and his team said BES12 may be the most important product launched by the company in its history. According to them, the product allows enterprises to manage both their iPhone and Android devices securely. The analysts believe that BES12 provides a competitive advantage and a catalyst for the company to re-engage enterprises.
Furthermore, the analysts said one of the key untapped opportunities of BlackBerry is licensing its IPR portfolio. Sue and his team emphasized that a basic analysis suggests that the company’s untapped IPR has a potential to become a multi-million revenue stream.