BlackBerry Posts Earnings in Q3, Revenues Lag Estimates

Canadian handset manufacturer BlackBerry Limited (BBRY), reported third-quarter fiscal 2015 financial results wherein the bottom line outpaced the Zacks Consensus Estimate but the top line missed the same by a huge margin.

Third Quarter Results in Detail

GAAP loss from continuing operations in the third quarter of fiscal 2015 came in at $148 million or a loss of 28 cents per share compared with $4,401 million or loss of $8.37 per share in the year-ago quarter. However, adjusted net income per share of a penny was significantly higher than the Zacks Consensus Estimate of a loss of 6 cents per share.

Total revenue in the reported quarter stood at $793 million against $1,193 million in the year-ago period. The top line also lagged the Zacks Consensus Estimate of $928 million. Segment-wise, Hardware revenues were approximately 46%, Services revenues were 46% and the remaining 8% came from Software and other sources.

Geographically, North America contributed 26.9% of the total revenue while Europe, the Middle East and Africa accounted for 46.1% of the figure. Similarly, Latin America and Asia Pacific generated 10.6% and 16.4% of the total revenue in the reported quarter, respectively.

In the third quarter, BlackBerry sold 1.9 million smartphones. Quarterly operating loss stood at $139 million compared with $5,025 million in the year-ago quarter.

At the end of the first nine months of fiscal 2015, BlackBerry generated $603 million of cash from operations against $405 million in the same period last year. Free cash flow, in the reported quarter, stood at $532 million compared with $145 million in the year-ago quarter. Cash and marketable securities were $2,771 million as against $2,529 million at the end of fiscal 2013. Long-term debt during the quarter totaled $1,657 million versus $1,627 million in the prior-year quarter.

BlackBerry currently has a Zacks Rank #3 (Hold).

Outlook

BlackBerry expects strong cash position and hopes to generate break-even cash flow at the end of 2015.

Our Take

Ever since Apple Inc.’s (AAPL) iPhone hit the market, BlackBerry and Nokia Corp. (NOK) have been facing intense competitive pressure. The situation further worsened when Google Inc. (GOOG) launched its Android software and several handset manufacturers readily adopted the user-friendly operating system.

Lately, BlackBerry has been exploring several alternate business options which should help the company offset escalating losses in its smartphone business. BlackBerry, together with healthcare data supplier NantHealth, has unveiled the world’s first secure cancer genome browser on BlackBerry’s Passport smartphones for doctors and clinicians.