Canadian handset manufacturer BlackBerry Limited (BBRY) reported second-quarter fiscal 2015 financial results with the bottom line surpassing the Zacks Consensus Estimate and the top line meeting the same.
Second Quarter Results in Detail
GAAP loss from continuing operations in the second quarter came in at $207 million or a loss of 39 cents per share compared with a loss of $965 million or $1.84 per share in the year-ago quarter. Also, adjusted net loss per share of 2 cents was significantly lower than the Zacks Consensus Estimate of a loss of 17 cents.
Total revenue in the reported quarter stood at $916 million against 1,573 million in the year-ago quarter and in line with the Zacks Consensus Estimate. Segment wise, Hardware revenues comprised approximately 46% of total revenue; Services revenues accounted for another 46% and the remaining 8% came from Software and other sources.
Geographically, North America contributed 32.4% of the total revenue while Europe, the Middle East and Africa accounted for 40.2%. Similarly, Latin America and Asia Pacific generated 12.1% and 15.3% of the total revenue in the reported quarter, respectively.
In the second quarter, BlackBerry sold 2.4 million smartphones. Quarterly operating loss stood at $198 million compared with an operating loss of $1,432 million in the year-ago quarter.
At the end of the second quarter of fiscal 2015, BlackBerry generated $417 million of cash from operations against $486 million in the prior-year quarter. Free cash flow, in the reported quarter, stood at $369 million compared with $286 million in the year-ago quarter. Cash and cash equivalents were $1,523 million as against $1,579 million at the end of first-quarter fiscal 2015. Long-term debt during the quarter totaled $1,507 million versus $1,627 million at the end of Mar 1, 2014.
Outlook
BlackBerry retains the view to reach break-even cash flow results by the end of fiscal 2015.
Our Take
Ever since Apple Inc.’s (AAPL) iPhone hit the market, BlackBerry has been facing intense competitive pressure. The situation worsened further with Google Inc. (GOOG) launching its Android operating system and several handset manufacturers adopted the same. In the face of such adversities, recently, BlackBerry came up with a unique square-shaped 4.5-inch screen HD support smartphone called “Passport”. We believe the unique square-shaped BlackBerry Passport phone should help reinvigorate the company’s smartphone sales and market share, aiding the segment to return to profitability. The company also plans to launch a new classic phone by the end of this year.
A Stock that Warrants a Look
BlackBerry currently has a Zacks Rank #3 (Hold). China Mobile Limited (CHL), with a Zacks Rank #1 (Strong Buy), is a better-ranked stock worth considering in the wireless industry.
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