BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) launched its Passport smartphone amid much fanfare last month. The Canadian company sold over 200,000 units of Passport on the first day of launch. Canaccord Genuity analysts T. Michael Walkley and Siddharth Sinha said in a research note that consumer response exceeded management’s expectations and initial build estimates.
Passport requires non-standard components
These Are John Buckingham’s Stock Picks For 2021
The economy remains in distress, although there are signs of recovery underway. John Buckingham of Kovitz, editor of The Prudent Speculator newsletter, has found that value stocks typically outperform coming out of economic downturns. Thus, he argues that this is an excellent time to be a value investor. Q4 2020 hedge fund letters, conferences and Read More
Surveys conducted by Canaccord Genuity reveal limited availability of Passport. Many carriers, retailers and online stores have run out of stock in the U.S., UK and Canada. The company is currently busy manufacturing more units. But the problem is that Passport’s unique screen size and form factor may result in longer manufacturing cycle times.
Passport requires non-standard components due to its square display. Further, BlackBerry recognizes hardware revenue based on sell-through rather than shipments into the channel. It prompted Canaccord Genuity analysts to lower their sell-through estimates for Passport and the upcoming Classic for the second-half of FY2015.
The research firm expects BlackBerry to sell 1.4 million BB10 devices in third-quarter, and a big chunk of that will be Z10 devices that have a lower ASP. However, Walkley and Sinha expect trends to improve after the launch of BES 12 in November. They expect BlackBerry to reach cash-flow break-even by the end of FY2015 and post non-GAAP profitability in the second-half of FY2016.
BlackBerry expected to post 4 cents in Q3 losses
Due to reduced hardware sales estimates in the later half of current fiscal year, Canaccord has also reduced its FY2016 loss estimates from 9 cents to 12 cents. For the current quarter, analysts expect BlackBerry to report $880.6 million in revenue and 4 cents in losses. For the full-year 2015, the Canadian smartphone maker is expected to generate $3.66 billion in revenue and $0.25 in losses per share.
Canaccord Genuity maintains its Hold rating on the stock with $10 price target. BlackBerry shares rose 0.44% to $9.10 in pre-market trading Tuesday.