March 20, 2015 | 10:55 am
By: Craig Bowles
Overview:
BlackBerry Limited (BBRY) is slated to report 4Q 2015 earnings before the bell on Friday, March 27th. The earnings release is expected at approximately 7:00 a.m. EST followed by an 8:00 a.m. conference call available at BlackBerry Investor Relations. The company was formerly known as Research In Motion Limited and changed its name to BlackBerry Limited in July 2013. Turnaround specialist John Chen became CEO in November 2013.
Outliers & Strategy
Key measures:
- Adjusted Earnings Per Share (EPS): The Street estimate is -$0.04 (range -$0.15 to $0.10) (source: Yahoo! Finance). Analysts have increased their consensus from -$0.06 three months ago.
- Earnings Per Share (EPS) from Continuing Operations: If an Adjusted EPS figure is not available, this value would compare with forecasts.
- Revenues: Analysts expect a decline of 17.8% y/y to $802.29 mln (range $661.19 mln to $1.06 bln).
- Price/Book of 1.5 compares to a 5-year average of 1.8; Price Sales of 1.4 is above the 5-year average 1.0. Cash flow turned positive.
- Analysts view BlackBerry with 3 Buy, 17 hold, and 7 sell ratings. (source: Analystratings.net)
- BlackBerry results could impact other mobile phone companies, such as Apple(AAPL), Google(GOOG), and Nokia(NOK).
- BlackBerry shares have a 1-day average price change on earnings of 9.96%. Options are pricing in an implied move of 9.85% off earnings.
Recent News
- 03/16: BlackBerry spy-proofs Samsung tablets with IBM(IBM) software, according to a post on Bloomberg.com.
- 03/16: Morgan Stanley said that BlackBerry sales of its software and phones are “not tracking anywhere close” to where they need to be to reach company goals, according to a post on Benzinga.com.
- 03/09: Goldman Sachs downgraded BlackBerry to Sell from Neutral with a price target lowered to $9 from a previous $10 citing a probable Q4 miss. The software-driven turnaround is likely to disappoint, and losses will probably widen in 2016, prompting more restructuring, according to a post on Benzinga.com.
- 03/06: Cowen has a Market Perform rating on BlackBerry but says it still has a long way to go in its transition to a sustainable business model. Though little is known about the three additional BlackBerry smartphones coming later in 2015, analysts are forecasting a 45 percent year-over-year increase in hardware revenue, according to a post on Benzinga.com.
- 03/04: Global Equities Research believes that the company could “double easily” (in market cap) if it continues down the right path of focusing on federal agencies, according to a post on Benzinga.com.
- 02/25: BlackBerry and Google team up to secure Android phones, according to a post on WSJ.com.
- 02/25: The new BlackBerry Classic does three things that might get a lot of attention: Android apps will now be available via Amazon’s app store, it’s incredibly cheap, and it has the classic BlackBerry real keyboard, according to a post on BusinessInsider.com.
Technical Review
BlackBerry didn’t show much in the way of duration above $10.50 in 2014 and this year has fluctuated around that level. Above $11.50 has 2013’s $14-$16 first half consolidation, which could act as resistance. The stock has a balance area mostly between $9.50 and $11.00 since mid-2014, so the eventual breakout will be important as new product data becomes available (Chart courtesy of StockCharts.com).
Summary
BlackBerry remains in a turnaround phase but has become cash flow positive as expected this year. Analysts are optimistic about the move away from the consumer market but question how many of the corporate user trials can be converted into paying customers. The company has beaten earnings estimates by 6c to 47c the last four quarters, mostly due to analysts’ overly negative expectations. Analyst consensus is less negative this quarter. The company probably needs to report breakeven or better on revenue closer to $910 million to gain a positive reaction from market participants.
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