BlackBerry’s earnings this week will be disappointing, all agree, but how much the numbers will disappoint remains to be seen. The Canadian firm will report its first quarter earnings on Tuesday.

BlackBerry Ltd Q1 To Disappoint, But By How Much?

All eyes on software revenue numbers

BlackBerry CEO John Chen expects to earn $600 million in revenue from software sales and BBM services by the end of the fiscal year 2016. Many believe it to be a far-reaching goal to more than double software revenue, which came in at $234 million in the fiscal year 2015.

BMO Capital Markets analyst Tim Long noted that software revenue will be watched closely, and the segment needs to show positive momentum to support the Canadian firm’s “ambitious turnaround goals.”

“Whether the numbers hit or not, we hope management provides enough metrics to get some transparency on the underlying trends in the software-oriented recovery,” Long said.

Morgan Stanley’s James Faucette believes the target may be reasonable but that the timeline may be unrealistic. Faucette stated that hitting $600 million a year for software and messaging business in two to four years “seems reasonable to us.”

QNX a potential opportunity for BlackBerry

Apart from software, another growth opportunity that analysts note for the Canadian firm is its embedded-device computing division, which has been witnessing new developments every now and then. Bob O’Donnell, founder and chief analyst for TECHnalysis Research, believes QNX holds an “interesting potential,” as going forward, security in the IoT and in smart cars will be “incredibly important.”

Going forward, BlackBerry faces challenges for its BES12 platform from mobile device management solutions from MobileIron, Microsoft and VMware. John Jackson from IDC believes that BlackBerry may not be able to serve the clients “entirely well in these circumstances.” Adding that the segment is “incredibly competitive” and that there is a negative impression on BlackBerry, he said the Canadian firm “remains distressed.” However, still Jackson believes that the time for panic has not come yet.

BlackBerry is expected to post a revenue of $690 million for the quarter with analysts expecting hardware sales to witness a decline despite the Canadian firm’s launching of new smartphones lately. The last two quarters have been surprising for analysts as the company came out cash-flow positive, which was largely due to cost-cutting efforts.