BlackBerry (BB) reports quarterly earnings on March 28th. Analysts expect revenue of $216.81 million and eps of $0.00. The revenue estimate implies a 4% decline sequentially. Investors should focus on the following key items:
Can BlackBerry Finally Monetize Its Security Features?
An expected 4% revenue decline would be alarming for most companies, but not for BlackBerry. The company is currently transitioning from a hardware and software company to a software and services. Last quarter total revenue of $226 million was off 22% Y/Y. Revenue for its core business (excludes handheld devices and SAF) was over 80% of total revenue, and grew 19% Y/Y. Within its core business segments BlackBerry is winning. I was previously salty about the company exiting hardware. I felt it removed a potential growth catalyst; I also suspected the company would lack the necessary scale to be profitable.
This brings me to another point – BlackBerry’s revenue base is paltry. It had an operating income loss of $49 million (excludes one-time items) on $226 million in total revenue. Its core revenue was $190 million. If it cannot turn a profit now then what happens when SAF and handset revenue continue to run off?
