The bar for BlackBerry’s next earnings report on Friday has been set very low by analysts, which means even a small beat could cause a significant jump in the company’s share price. Friday’s report is for the fourth quarter of the 2015 fiscal year, and all eyes will be on software revenue.

BlackBerry Ltd Should Exit Devices: UBS

BlackBerry in the middle of transition

BlackBerry is continuing a tough transition from being a devices company to a software company, with management targeting $500,000 million in software revenue for the 2016 fiscal year. Wall Street has urged management to dump the devices division to focus entirely on software for some time, and UBS analysts are renewing this call.

For now anyway, BlackBerry shows no signs of deciding to shed its devices segment, releasing several new handsets each year in a gamble to bring former loyalists back to the brand.

Will BlackBerry ever become a pure-play EEM firm?

In a report dated March 23, UBS analyst Amitabh Passi and associate Tejas Venkatesh said they would prefer that BlackBerry become a pure-play enterprise mobility management company by getting rid of its devices. They see this as being an important move because it would remove the perception that BlackBerry is still trying to compete with the likes of Apple and the many Android smartphone makers.

By moving entirely into enterprise mobility management, they say BlackBerry would be “on a more equal footing” with companies like MobileIron, VMware and other companies in the space. Additionally, they think dumping devices would remove some of the volatility in BlackBerry’s stock as they cause many investors to question the company’s future and ability to succeed.

Focusing on BES 12

In Friday’s earnings report, analysts will be especially focused on adoption rates for BlackBerry Enterprise Server 12 and other value-added services like security and productivity and other enterprise services. The UBS team said it’s important that BlackBerry not only monetize BES12 but also its other software bundles like BlackBerry Messenger.

They don’t think BlackBerry will be able to hit its target of $500 million in software revenue for 2016. They’re estimating just $430 million, saying that a “certain set of assumptions” would have to occur in order for the company to hit that target. One of those assumptions is a very-high 70% conversion rate for BES12 (All charts and graphs in this article are courtesy UBS.).

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One of the reasons UBS is so bearish on BlackBerry’s software revenue is because of their latest survey of chief investment officers of major companies. They report that the release of BES12 hasn’t changed their likeliness of opting for BlackBerry over other enterprise mobility management solutions

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Expectations for BlackBerry’s earnings report

The UBS team maintained its Neutral rating and $10 per share price target on BlackBerry going into this week’s earnings report. Their estimate for losses per share moves from 2 cents per share down to 5 cents per share.

For the 2016 fiscal year, they’re projecting earnings of 1 cent per share, an improvement from their previous estimate of a  loss of 1 cent per share.

Can BlackBerry succeed?

While UBS sees BlackBerry’s $500 million target for software revenue as being a long shot, GMP analysts think it’s possible. Analysts Deepak Kaushal and Angelica Uruena have a Hold rating and $9 per share price target on BlackBerry.

They believe BlackBerry’s expectations of hitting cash flow breakeven in 2015 and $500 million in software revenue in 2016 can be achieved through improvements of hardware margins and price increases “into the core customer base,” plus “some early expansion of cross-platform device management.”

GMP does note, however, that BlackBerry still faces headwinds from “growing irrelevance” and competition. For the fourth fiscal quarter, they’re estimating losses of 2 cents per share on $864.8 million in revenue. Those numbers compare to the consensus estimates of $820 million in revenue and losses of 4 cents per share.

As of this writing, shares of BlackBerry were up 0.11% to $9.53 per share at the NASDAQ.