BlackBerry Analysts Not Convinced Following Q4 Results

Shares of BlackBerry Ltd

fell as much 4.5 percent after the company's sales missed Street forecast. The company hinted that it may exit hardware business if it fails to achieve break-even by September. Following is the Wall Street's take on the results: Goldman Sachs – Sell, TP $6 "We believe profitability will remain elusive for BlackBerry given low smartphone volumes and Services declines, offsetting growth from the Software business. Smartphone units declined sequentially for a sixth consecutive quarter, despite launching the first ever BlackBerry device on Android (the Priv) and ramping distribution." "Management guided FY17 (Feb) Software revenues to grow 30% yoy (implying ~$685mn vs. prior GSe/Street at $636mn/$690mn). We believe the Software outlook could face pressure from 1) uncertain IP licensing revenues (none in F4Q), 2) an intensely competitive environment, and 3) disruption around the move to an integrated BlackBerry/Good platform." Related Link: http://www.benzinga.com/analyst-ratings/analyst-color/16/04/7796397/blackberrys-software-growth-already-priced-in JPMorgan – Neutral, TP cut to $8 from $9 "We come away more positive on Software prospects but still cautious as both hardware and SAF declines continue to create volatility in results. Reiterate Neutral." BMO Capital Markets – Market Perform, TP $8 "February-quarter results were mixed. Revenues were well below our estimates owing to a big miss in handsets, while other segments were in line." "We remain on the sidelines, looking for upside opportunities in software and a more predictable handset business." Related Link: http://www.benzinga.com/analyst-ratings/analyst-color/16/04/7795951/blackberry-will-fall-20-before-anything-gets-better-cred Raymond James – Market Perform, TP $8 "We don't believe the acquired Software revenue streams (e.g. Good) come close to the profitability of the SAF revenues it is trying to replace. While BBRY has reported positive FCF/EBITDA for the last 7 quarters, it has been declining and unless Software outperforms current guidance we expect more pressure on these metrics in F2017E." Deutsche Bank – Hold, TP cut to $6.50 from $7 "We note that device ASPs could incrementally decline after the release of BBRY's new mid-range Android device from 2H FY17+." "Our neutral near-term view is based on: 1) BBRY seeing softness in the high end of the smart phone market; 2) Q/Q volatility in device sales; and 3) slowing core business -summing up the core basis for our caution on near-term fundamentals and our Hold rating." Imperial Capital – In-Line, TP $9 "We anticipate continued headwinds in hardware sales, given the company's aging product portfolio and distribution challenges with Priv in the enterprise market." "We await stronger execution on the integration of Good Technology and expansion of QNX (especially in automotive), capitalizing on the emerging mobile and Internet-of-Things (IoT) opportunities." "Management indicated that it is conducting pilots of BlackBerry Radar, which is scheduled for general availability this summer. However, we note that BBRY faces significantly more established asset tracking competitors and security may be a niche use case, in our view." Shares of BlackBerry were down 3 percent at $7.25. They have dropped about 22 percent this year.