BlackBerry Earnings Preview: What To Expect

Blackberry Ltd (NASDAQ:BBRY) (TSE:BB) will release its fiscal Q2, 2015 results on  Friday, September 26 before the market opens. Expectations are pretty high from the Canadian company, especially as CEO John Chen’s relentless efforts to make BlackBerry profitable have started showing signs of a turnaround. The Waterloo-based company has sent out invites to media for its September 24 event, where it is expected to unveil its weird-looking but highly-anticipated smartphone Passport.

BlackBerry’s Q2 revenue expected to decline 40%

Analysts on average expect the ailing smartphone maker’s Q2 revenue to $945.56 million, down 39.90% YoY from $1.57 billion in the same period last year. However, losses are expected to narrow down. BlackBerry had lost 47 cents a share in the August quarter last year. But analysts estimate the company to lose only 16 cents a share in the latest quarter.

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For the full-year 2015 (March 2014 to Feb 2015), the consensus estimate calls for $3.91 billion in revenue and 61 cents a share in losses. BlackBerry had lost $1.36 per share on revenue of $6.81 billion in fiscal year 2014. BMO Capital Markets analyst Tim Long said in a research note that operating expenses cuts and lower quarterly losses give the company management some more time to transition into a software business.

For the August quarter, BMO Capital Markets expects BlackBerry to report $883 million in revenue, far below the Wall Street consensus. Mr Long said Wall Street expects higher revenue from hardware. However, he expects smartphone shipments of just 1.7 million units, only a slight improvement from 1.6 million units in May quarter. Falling BB7 device sales were offset by growth from the new Z3.

BlackBerry’s service revenue continues to shrink

BMO Capital forecasts August quarter losses of 15 cents per share. The research firm expects smartphone ASP of $223, well below the consensus estimate of $232. That’s because Tim Long sees heavy price erosion for existing smartphone models and weak performance of high-end smartphones. Service revenues are expected to come in at $438 million in Q2, lower than $522 million in May quarter. Mr Long believes the average revenue per user (ARPU) declined from $3.13 in May to $2.86 in August.

BlackBerry shares fell 0.32% to $10.85 at 12:40 PM EDT on Monday. BMO Capital Markets has a Market Perform rating on BlackBerry stock with $9 price target.