BlackBerry Ltd (NASDAQ:BBRY) will report its first-fiscal-quarter (2015) earnings before the bell on Thursday, June 19. Monday, on Bloomberg Television’s “Bottom Line” John Butler discussed the upcoming results with Julie Hyman.
Analysts expect, in average, adjusted earnings per share of -$0.25 (the estimates range between -$0.52 and -$0.02) (Yahoo! Finance). Although this does not look encouraging, I should highlight the fact that analyst consensus has increased from -$0.38, 90 days ago. Also, in the last reported quarter, the company beat estimates by 85.5%. Regarding revenue, analysts project a 68.8% decline, year-over-year, to $963.93 million.
So, here’s what to Look for in BlackBerry Ltd (NASDAQ:BBRY)’s first quarter results:
Mr. Butler stared by assuring that, in general, investors do not really care (a lot) about the quarterly results. Instead, he said, the bigger, long-term, picture is what concerns them.
“This is a turnaround story, with a great new CEO named John Chen. And so, the focus on the quarter will be, where is Jhon Chen taking the company? What is the cash burn rate like? And what can we expect in coming quarters? He has made some promises he needs to keep.”
Regarding the declining market share of Blackberry on the Smartphones market, Mr. Butler stated that Jhon Chen “has come in and he has looked at Blackberry and said ‘everyone before me has looked at this as a device company, but the reality is it has a big portfolio of assets, including Blackberry Messenger, Blackberry Enterprise Services, a big patent portfolio.’ So he is looking to monetize it all, and take the company more into services and software. And we saw that last quarter were services and software represented a bigger percentage of revenue than the handsets.”
Finally, they went over the cash burn issue, which is a big one.
“On the inside, they have two quarters [to solve this issue], but they have done a lot to raise money, including selling half a billion dollars of real estate. In reality they probably have three to four quarters. But John Chen has said by the end of the year he wants to be cash-flow-positive, and I would argue he needs to meet that promise,” Mr. Buttler concluded.
Disclosure: Javier Hasse holds no position in any stocks mentioned.