BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) stated on Monday that it will allow mobile device management (MDM) companies to manage BB10 devices, which Evercore analysts believe is “a step in the right direction.” Given this development, the company’s drop in sales of the smartphone is expected to slow down as IT departments will be able to use their Android/iOS platforms to manage BlackBerry devices without the new BES platforms. The report from Evercore was published on May 14, 2014 by analysts Mark McKechnie and Zachary Amsel.
Samsung a better choice
Also, the Canadian smartphone maker said that companies like Airwatch, Citrix and IBM are interested in working with BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) on an open ecosystem to support BlackBerry’s Z10 and Q10 phones.
From the strategic point of view, the handsets from the Canadian company prevent major Android players and Apple from joininghands with BlackBerry’s services business, as they compete for same customers, leaving them with less incentive, according to analysts.
Samsung will probably be a better choice to support an open MDM player with its SAFE and Knox efforts to compete with BlackBerry, who is dominating the highly secure and regulated markets. Analysts are expecting ecosystem headwinds as long as BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) supports its own handsets.
Also, the report notes an expected subscriber decline with “perhaps a handset inventory snap-back” and a “long-term residual hold” on loyal BlackBerry users, who support the QWERTY keyboard and are not very fond of consumer apps.
BlackBerry in transition mode
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is expected to post a decline in service revenue of around $1.3 billion on 35 million subscribers at $3/month at 15% operating margins and break-even for handsets. This fuels EPS forecast at $0.35 on $3.7 billion sales in the financial year 2018 time frame, compared to the estimate of ($0.64) on $3.6 billion for financial year 2016.
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is in transformation mode awaiting the release of BES 12. Also, the company is looking forward to a cash tax credit in the range of CAD$550-580 millionfrom the Canadian government, with CAD$400 million hitting in the first half 2015, which would add $1.25 per share to its net cash balance.
Evercore analysts have given an Underweight rating to BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) with a price target of $6.
