Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

BlackBerry Ltd (BBRY): Crawford Del Prete Says Investors Should Look At Margins

 While other figures from BlackBerry Ltd (NASDAQ:BBRY) may seem the more important metrics to focus on, the key figure from the besieged company is margins, according to IDC Chief Research Officer Crawford Del Prete.

In an interview with Cory Johnson for Bloomberg West, Del Prete discusses why he is so keen on analyzing BlackBerry Ltd (NASDAQ:BBRY)’s margins. Asked how people should model the firm going forward, he said that it would probably be a shrinking business in terms of top line.

“I do think you have to model this as a stabilization slowly-declining revenue business with an improving margin base. That’s why I am so focused on that margin profile and what that margin profile looks like because this business is going to be, absolutely without a doubt, smaller on the top line a year from now than it is today,” Del Prete tells Johnson.

However, he points out that even if BlackBerry Ltd (NASDAQ:BBRY) does show decline in revenue over the years, it would be healthier if it improves margins. He says that he thinks that this is what people should be looking for as the firm increases its revenue from its software business. This is probably why the company is also trying to bring their software to other platforms, he adds.

BlackBerry Ltd (NASDAQ:BBRY) is fresh off of reporting is fourth quarter results with total revenue at $660 million broken down to $310 million from services, $277 million from hardware, $66 million from software and $7 million from other sources. The firm made a profit of $28 million.

Johnson and Del Prete also discuss why there is a gross margin decline in the company when they are working more with ODMs (Original Device Manufacturers) that are making which means margins should increase.

Del Prete says that he thinks “what it comes down to is you have to put some incentives out there to get people to pay up for the platform. If you are going to stay relevant, you have to be price aggressive at least initially to keep people on that platform. So they are kind of balancing this idea that you have a loyal customer base but are also trying to attract people to the new touch-enabled BlackBerrys.”

The company is trying to get people on those platforms, the analyst says and it has to give incentive for people to try those products more so than what it gives as incentive for those getting the traditional keyboard-based products the company is releasing.

BlackBerry, is BBRY a good stock to buy, Crawford Del Prete, margin, revenue, metrics,

Meanwhile, Del Prete and Johnson took note of the 20% improvement in software for the company. The IDC research chief said that better cash flow from this side of the business means a new revenue growth engine for the company albeit small part of the overall business. Nonetheless, it affects the gross margin and profit lines in a bigger way as there is usually higher margins for software, he says.

As for hardware, he says that it means a lot now because it contributes 40% of BlackBerry Ltd (NASDAQ:BBRY)’s top line. Having said that, however, he notes that he expected a little better stabilization in the company’s gross margins because what the company essentially has is a fan base showing their “undying loyalty” to the platform. This means the firm could probably test the level of price sensitivity for those customers, he says.

Essentially, the firm could test how high they can sell their devices to their loyal customers for, he says, but he also noted that the firm is juggling with expanding the pool of BlackBerry users over time. This is a very, very difficult task, Del Prete says, as people have been fleeing the BlackBerry platform in recent years.

I just made 84% in 4 daysI Just Made 84% in 4 Days By Blindly Following This Hedge Fund

I just made 84% in 4 days by blindly imitating a hedge fund’s stock pick. I will tell you how I pulled such a huge return in such a short time but let me first explain in this FREE REPORT why following hedge funds’ stock picks is one of the smartest things you can do as an investor. We launched our quarterly newsletter 2.5 years ago and not one subscriber has, since, said ‘I lost money by EXACTLY following your stock picks’. The reason is simple. You can beat index funds by creating a DREAM TEAM of hedge fund managers and investing in only their best ideas. I just made 84% in 4 days by blindly imitating one of these best ideas. CLICK HERE NOW for all the details.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!