Wells Fargo Reiterates Market Perform Rating on BlackBerry Following Lowered Estimates

In a report published Monday, Wells Fargo Securities analyst Maynard Um reiterated a Market Perform rating on BlackBerry Ltd. BBRY. In the report, Wells Fargo Securities noted, “On the one hand, we believe a more concentrated focus by BBRY is positive and think restructuring the company for the revenue opportunity is the right move. However, despite BBRY citing increasing penetration of BlackBerry Enterprise Service 10 servers (note it did not break out how many are merely test servers), we are concerned that customers may delay or altogether forgo purchases given the uncertainty surrounding the company (for example, if there is a buyer, would they be committed to long-term customer support and roadmaps). We believe BBRY needs to act quickly and decisively in coming to a conclusion with regard to any potential sale of the company and should look to sell assets (like parts of its $1.3bn in buildings/leasehold improvements/other) to bolster its cash position. Other issues – 1) based on our estimates, hardware gross margins are likely negative this quarter and 2) plans to re-tier the Z10 would put more pressure on gross margin.” BlackBerry Ltd. closed on Friday at $8.73.