BlackBerry Ltd (BBRY) Q2 Results Point To The Inevitable

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BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) posted its second quarter 2013 results last week, and reported revenues of $1.6 billion and Pro forma EPS of $0.47, which was in line with the guidance provided. Analysts Brian Modoff and Kip Clifton from Deutsche Bank feel that BlackBerry has a grim future, and may not be able to retain talent to make a turnaround.BlackBerry Ltd (BBRY) Q2 Results Point To The Inevitable

BlackBerry also cancelled its conference call and thereby avoided questions regarding changes in revenue recognition and letter of intent from Fairfax financials.

BlackBerry may face talent shortage

As was expected, there was no guidance released from BlackBerry. Analysts Brian Modoff and Kip Clifton at Deutsche Bank maintain Sell ratings on the stock, with a price target of $6, which is irrespective of the results or letter of Intent.

Prem Watsa, leader of Fairfax Financials, has sent a letter of intent to BlackBerry to purchase the whole company for $9 per share or $4.7 billion. Analysts think that the need for due diligence, financing and $1 billion “from outside investors place this back-stop at risk.” BlackBerry will also face problems with retaining talent as Google/Motorola came up with their engineering office in Waterloo last week, according to analysts.

Grim future

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s future is not encouraging, according to analysts, as the cash balance of the company declined from $502 million to $2.6 billion, and the Canadian firm took a $934 million inventory write-down. However, inventory surged from $338 to $941 million even after the write-down. BlackBerry calculated its revenue in a different way this time. Traditionally, it recognized revenue on total units shipped. “We suspect high inventory levels in the channel prompted carriers to push back,” said analysts.

Analysts feel that handset business is not feasible in the future, though it may get some traction in the emerging market. Overall, the future is grim.

Physical keyboards may revive

Touchscreen phones have taken over physical keyboard phones over the past few years, and users tend to use virtual keyboards rather than physical ones. However, there are chances that some companies may try to get back to physical keyboards. Companies like Samsung have launched the phone with a physical keyboard, and it is positioning these keyboard communication devices towards the professionals who once were BlackBerry fans and are ardent followers even now. This year, the company launched Knox, a set of security features for Android, targeted towards government and corporate users. There is speculation that Motorola will also want to enter the keyboard phones space once again.

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