Many people believe that BlackBerry Ltd (NASDAQ:BBRY) is past its best and there is no way back to profits for the phone maker. This belief was validated by the fact that BlackBerry Ltd (NASDAQ:BBRY) stock has lost more than 85% of its value in the last 5 years. BlackBerry Ltd (NASDAQ:BBRY) has tried to revoke interest in the brand by launching new phones like Passport and Classic in 2014. Did BlackBerry Ltd (NASDAQ:BBRY) manage to sell enough units of these new devices to turn around? BlackBerry Ltd (NASDAQ:BBRY) is expected to report the quarter earnings before the opening bell on Thursday. What to expect from the earnings report? Colin Gillis, Director of Research at BGC Partners talked on CNBC about his opinion on BlackBerry Ltd (NASDAQ:BBRY) stock and previewed the expectations from the earnings report.
Gillis pointed out that this will be end of the fiscal 15 for BlackBerry Ltd (NASDAQ:BBRY) and he said that the BlackBerry Ltd (NASDAQ:BBRY) will attempt to stop the bleeding and get back the company to stability. He mentioned that BlackBerry Ltd (NASDAQ:BBRY) would strive hard to make the cash flow into positives.
Gillis said that BlackBerry Ltd (NASDAQ:BBRY) had achieved the target of positive cash flow one quarter earlier than expected in the last quarter. He mentioned that they would like to carry on the momentum the do the same in the current quarter as well. Gillis pointed out that CEO of BlackBerry Ltd (NASDAQ:BBRY), John Chen has already turned around the proceedings in Sybase and he feels that he can do it again with the phone maker.
BlackBerry Ltd (NASDAQ:BBRY) is looking up to the software business to come good in the future and make some money for them. But can it come good for them? Gillis thinks it can.
“[..] Just to frame it in perspective, not your standard investing company. It’s a special situation. So you have to have the stomach for the volatility that’s going to be associated with the company that’s in transition. Now if you look at BlackBerry, remember they have this services revenue, that’s in decline. That’s associated with their old 7 phones and in fact that revenue, which is about 40% of total is going to be declining 15% every single quarter. So that’s a tough head wind they are facing. Conversely they are trying to build up software revenue and that’s going to be their future. [..] They have done a decent job with their platform, north of 6 million licenses, but they need to convert those people and upsell them into their gold platform to generate more revenue. They have a $500 million target to hit in fiscal 16 over the next 4 quarters. So this is going to be one of challenges for John Chen,” Gillis said.
Gillis feels that if Chen could achieve the target then BlackBerry Ltd (NASDAQ:BBRY) will regain interest from investors since they have transitioned from a legacy business model to an enterprise business model.
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