Oppenheimer's Uerkwitz: BlackBerry Might Need More Restructuring

If BlackBerry Ltd BBRY continues to struggle in both handset sales and software, another round of cost-cutting is likely to result, an analyst said Monday.

BlackBerry is slated to post first-quarter earnings on Tuesday morning, a few hours before it holds its annual shareholders meeting.

Oppenheimer's Andrew Uerkwitz said Wall Street is underestimating BlackBerry's difficulty in competing on the smartphone front and said the weakness may heighten its declining revenue from devices.

BlackBerry last month said it would reduce its staffing by an undisclosed amount in a move to boost profits.

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"On the positive side, we're one or two quarters away from seeing growth in the software business, which could provide some momentum," according to Uerkwitz, who maintained a Market Perform rating on BlackBerry.

But BlackBerry is aiming to de-emphasize hardware sales in favor of a focus on software. It seeks to double revenue from the segment to $500 million in 2016.

The company is expected to post the first significant sales in the quarter of its recently launched Classic device.

When BlackBerry executives discuss recent results, investors should focus on handset shipments and comments on progress of its software revenue, Uerkwitz said.

He added that his channel checks suggest weak handset results for BlackBerry. The once-dominant BlackBerry remains in a "very difficult market position" with a shrinking customer base.

The company also faces aggressive competition from Chinese manufacturers who "make it almost impossible for BlackBerry to gain traction" if it jettisons its operating system in favor of Android, Uerkwitz said.

Wall Street analysts on average expect BlackBerry to post an adjusted quarterly loss of $0.03 a share, on revenue of $683.65 million.

In the year-earlier first quarter, BlackBerry posted adjusted income of $0.11 a share, on revenue of $966 million.