BlackBerry Earnings Preview: Is Software Gaining Traction?

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BlackBerry Earnings Preview: Is Software Gaining Traction?
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BlackBerry is scheduled to release its next earnings report on March 27 before opening bell. The company is expected to continue losing money for the next several quarters.

What to expect in BlackBerry’s earnings report

BMO Capital Markets analyst Tim Long is looking for losses of 3 cents per share on $870 million in revenue for the February quarter, which is the company’s fourth fiscal quarter of 2015. Consensus estimates for the company’s earnings report are losses of 3 cents per share and $802 million in revenue. For the full 2015 fiscal year, Long projects losses of 15 cents per share. He continues to rate BlackBerry at Market Perform with a $10 per share price target.

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The analyst estimates that BlackBerry sold 2 million smartphones in the February quarter and will sell 1.9 million in the May quarter. Of those numbers, he expects 1.7 million of the February quarter units will be BlackBerry 10 devices, while 1.6 million of the May quarter units will be BlackBerry 10 units. Unfortunately he thinks these estimates could end up being too high because availability of the new Classic smartphone was limited during the February quarter. Consensus estimates for BlackBerry 10 unit in the quarter suggest 1.5 million.

Long expects an average selling price of $236 for smartphones in the February quarter and $232 in the May quarter. For BlackBerry 10 units, he expects to see an average selling price of $253 and $247.  Wall Street is looking for an average selling price of $220.

The analyst expects to see service revenue of $315 million for the February quarter and $268 million for the May quarter. He thinks average revenue per user fell to $2.62 in the February quarter compared to $2.72 in the November quarter.

Long projects $72.3 million in service revenue for the quarter and $84.9 million for the May quarter. That’s an increase from $54 million in last year’s February quarter.

Evidence of a software shift at BlackBerry

Long expects next week’s earnings report to demonstrate that BlackBerry is indeed turning things around by shifting toward software. He believes the company’s monetization of BlackBerry Enterprise Server 12 is beginning to go into effect.

He isn’t expecting a large contribution from software until the second half of the 2016 fiscal year, but he does want to see signs of life and indications that software revenue is rising steadily between February and May. He added that the February and May Quarters “should be even more telling as the discounted transition to BES12 ended at the end of December.

What to expect on BlackBerry’s earnings call

BlackBerry has scheduled its earnings call for 8 a.m. Eastern on March 27. He doesn’t care very much about declines in device numbers and services revenue because he thinks software traction is more important right now.

He wants to hear commentary from management about the rollout of BES12. Any comments they have should set expectations for the progress of BlackBerry’s software business. He also expects management to continue targeting a doubling of its software revenues to $500 million in the 2016 fiscal year.

Updated on

Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at Mjones@wordpress-785388-2679526.cloudwaysapps.com.
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9 COMMENTS

  1. Mmm you must know nothing about phone security. That’s the area where Samsung and Googke come running to BB for help. Must be because BB can do what they can’t.

  2. I love my Blackberry z30. I traded in my old iphone 5s.
    The Blackberry 10.3.1 OS is amazing and now that it has Amazon’s Android app store and Blackberry’s app store; there are no apps missing from what I want and need. The battery lasts at least twice as long as my old iphone too!

    ** If you’re still judging Blackberry based on their old devices and old OS – You’re doing yourself a disservice.
    The new Blackberry 10 devices and OS is amazing and can’t be compared to their antique devices.
    Try out a new device before judging Blackberry. THINGS HAVE CHANGED!!

  3. Why so we can all be exposed to viruses and hacks? The simple minded are so amusing. I wouldn’t be caught dead without my Blackberry 10 securing my client information. Humans need to stop acting like herd animals and choose the truly best phone, Blackberry.

  4. Blackberry is doing fine into their recovery and will post a small profit again with guidance for a higher margin from now on.
    Goldman and Morgan are well known for manipulating stocks, currencies and other countries financials. John Chen is a mastermind of turnarounds. Good things come in time.

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