Accounting Rules Could Drive Gross Margins for BlackBerry
On Tuesday, Wells Fargo released some neutral comments on BlackBerry (NASDAQ: BBRY).
Analyst Maynard Um believes accounting methods will “drive gross margins up (combined with lower hardware mix).” Accounting rules “will allow recognition of the perpetual license upfront (vs amortized over a year),” Maynard said.
“Combined with our expectation for a lower opex announcement and cash flow tailwinds, this could drive FY2015 EPS,” the Wells Fargo analyst said.
Maynard remains cautious because of:
- Pace of subscriber churn.
- Risk of regulated industries adopting alternative solutions to BlackBerry (White House for example).
- Potential pause ahead of BES 12 and Q20 releases.
The analyst has a Market Weight rating on the stock.
Shares of BlackBerry 0.27 percent to $9.40 in pre-market trading. Shares are up 26 percent year to date.
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