Hardware Still A Burden On BlackBerry's Business

The hardware business of BlackBerry Ltd BBRY continues to weigh on its fundamentals as its Priv device failed to make a desired impact in the highly competitive smartphone market.

BlackBerry reported first quarter revenues of $400.0 million (non-GAAP: $424.0 million), meaningfully lower than Street view of $474.5 million. Non-GAAP EPS of $0.00 (break even) came in ahead of consensus calling for $(0.07).

Deutsche Bank's Vijay Bhagavath said the company's hardware business continue to be a drag with another soft quarter (about $145 million versus consensus: $192.7 million, hurt by weak sales of Priv in an intensely competitive and saturated high-end smart phone market.

"BBRY device shipments fell further to ~500K versus consensus of 627K at ASP of ~$290, below consensus of $323. We anticipate BBRY device ASPs to further decline incrementally following the release of the new mid-range Android device in 2H FY17," Bhagavath wrote in a note.

Bhagavath, who has a Hold rating on the stock, narrowed his loss estimate for the second quarter to $0.19 from $0.27.

However, he expects a wider loss for fiscal 2017 at $1.85 (versus prior estimate of $1.15 loss).

At time of writing, shares of BlackBerry fell 4.07 percent to $6.72.