BlackBerry Results Not as Impressive as Initially Thought

If the price action of the stock is any indication, what looked like a blowout report wasn’t all that great once investors and analysts started digging in.

The Numbers

Probably the biggest headline to come from the release is the EPS number. Benzinga reported on Tuesday that the consensus number was $-0.39 per share which was later revised by the street to a 30 cent loss. That number came in at a positive $0.22 cents per share. (Yes, positive, not negative.) That alone caused the stock to spike more than 9 percent when it reopened for trading around 7:30AM.

According to CEO Thorsten Heins, “We have implemented numerous changes at BlackBerry over the past year and those changes have resulted in the company returning to profitability in the fourth quarter.”

That’s great news, but revenue came in at $2.68 billion versus consensus of $2.84 billion—down 2 percent from the previous quarter. Revenue and EPS are important but investors really wanted to see how many Z10s the company shipped.

1 million, according to the release. In comparison, Apple AAPL sold about 5 million iPhone 5s during the first three days of launch. You know, the phone with “disappointing sales?”

Revenue numbers broke down to 61% for hardware, 36% for service and 3% for software and other revenue. A total of 6 million smartphones were shipped along with 370,000 BlackBerry PlayBook Tablets.

Analysis

ON CNBC this morning, Michael Genovese of MKM Partners said he was concerned about the loss of BlackBerry’s subscriber base. According to Genovese, the company now considers a subscriber somebody that owns a BlackBerry device instead of somebody who owns a device and has a data plan.

The company reported losing 3 million subscribers—an alarming number on its own but with the new definition of a subscriber, that number could be significantly higher—as high as 9 million.

Next, don’t confuse 1 million Z10 phones “sold” with “shipped.” The release says, “shipped” which is an indication of supplier orders. Whether companies like AT&T T will see impressive demand for the phones is still unclear but analysts are mixed.

In a research note earlier in the week, Goldman Sachs wasn’t optimistic. “The Z10 launch at AT&T on March 22 was disappointing, with limited marketing and tepid sell-through at AT&T and Best Buy BBY stores alike. While we thought the international launch was solid, the US launch is critical for BlackBerry’s ultimate success.”

In a Jefferies notes, Peter Misek said, “We checked with 30+ stores following the Z10's launch on 3/22. We think demand is slightly better than our very modest expectations. Our checks also indicate that AT&T Business is seeing significant interest and could account for a meaningful portion of demand.”

As of 8:30AM, the stock had given back it’s 9 percent gain and is now flat.