BlackBerry is not the same company is was as little as five years ago. Imperial Capital lowered their target price on shares of BlackBerry from $7.50 to $7.00 and set an in-line rating on the stock in a research note on Thursday, June 16th.
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It has a declining hardware business and a booming software and services business.
It’s a premise that’s apt to ruffle the feathers of a small but loyal – and vocal – legion of BBRY investors, but that doesn’t make it untrue.
On a GAAP basis, the company posted a diluted first-quarter loss of $1.28, compared with net loss of $0.10 per share in the first quarter of fiscal 20165. The device business has a role in BlackBerry, but it diminishes each quarter.
Analysts have estimated a loss of 8 cents per share on revenue of $470.94 million for the quarter, compared with a loss of 5 cents per share on revenue of $658 million for the same period a year ago.
It said adjusted revenue was $424m. The non-GAAP revenue breakdown for the quarter was approximately 39% for software and services, 25% for service access fees, and 36% for mobility solutions.
Chen admitted that BlackBerry’s goal for its software division is a lofty one, with the market in general now growing by an annual rate of only 15 per cent, but seemed confident that the company could rise to the challenge as he mentioned such ventures as a new platform for autonomous vehicles, cybersecurity consulting services, and the integration of its enterprise solutions with Microsoft Corp.’s cloud platform, Azure.
BlackBerry is due to report first quarter results on Thursday. If successful, BlackBerry Radar would boost QNX more. Revenue tanked, but software simply has better margins. It’s just not clear to what degree. The firm earned $487 million during the quarter.
It believes full year earnings will still come in ahead of consensus.
It works, but it’s hardly impressive. “In our Mobility Solutions business, our objective is to achieve operating profitability in the short term”, said John Chen, Executive Chairman and CEO, BlackBerry. Called the BlackBerry Priv, the device has reportedly not been as much of a success as the company’s management, employees and shareholders would have wanted. Not to mention, the creation of BlackBerry phones that use the Android operating system will likely help with profitability as well.
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It’s too easy for other organizations to compete when the only battleground is software and mobile enterprise security. Total cash, as of the end of May, stood at $2.5 billion.
