BlackBerry is scheduled to release the earnings results for its second fiscal quarter on Wednesday before opening bell. Wall Street is waiting anxiously to hear if the company will dump its struggling handset division, although it sounds like that might not happen—at least not yet. Although CEO John Chen’s deadline to make the division profitable has arrived, he may get more time because of the recent strategy shifts, the biggest of which was the decision to make Android-based phones.

BlackBerry Ltd Earnings Preview

BlackBerry might raise guidance

RBC Capital Markets analyst Paul Treiber expects BlackBerry to post results that are roughly in line with consensus. He’s estimating $397 million in revenue, which is just slightly ahead of consensus at $394 million. He expects adjusted losses of 5 cents per share, which matches the Street. He believes the company might increase its outlook for adjusted earnings for fiscal 2017 because of the recent refinancing of its convertible debentures.

He expects the $207 million licensing deal with Emtek to help contribute to the 30% year over year increase in software for fiscal 2017. He’s projecting a 2% sequential increase in software revenue to $169 million.

He also expects the losses in the handset division to begin declining thanks to the DTEK50, which has shifted the handset mix toward Android-based devices. Android phones have positive gross margins, so he expects the operating loss on the handset division to fall from $21 million in the previous quarter to $13 million in the second quarter. He’s looking for handset sales to fall 7% sequentially to $142 million. He doesn’t expect a shutdown of the handset segment because of the rumors about the upcoming DTEK60.

Treiber continues to rate BlackBerry at Sector Perform with a $7 price target going into Wednesday’s earnings report.

Still concerns about BlackBerry’s services business

Credit Suisse analyst Kulbinder Garcha and team have an Underperform rating and $6 price target on BlackBerry stock. They project $406.4 million in sales and adjusted losses of 3 cents per share with a gross margin of 51%, placing them ahead of RBC, although they have a lower rating and price target for the company’s stock.

They’re concerned that service access fees are still a significant portion of the company’s business as the segment’s decline is accelerating. They add that while BlackBerry could exit hardware eventually, the company might not be able to be profitable unless software scales or operating costs are slashed. The Credit Suisse team doubts that the software business is sustainable because BlackBerry’s patent licensing revenue appears “unpredictable.”

They also question the quality of some of the software acquisitions the company has made, particularly Good Technology, which they see as bringing great integration risks. They’re estimating $172 million in software revenue for the second quarter.

BlackBerry shares edged lower by as much as 0.88% to $7.84 during regular trading hours on Monday.