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Analysts Comment on BlackBerry's Weak 3Q14

Analysts Comment on BlackBerry's Weak 3Q14

Analysts Comment on BlackBerry's (NASDAQ: BBRY) weak third quarter 2014 results.

BlackBerry reported third quarter adjusted EPS of $0.67 vs $0.43 estimate. EPS were down 205% from the same quarter last year. Revenue was reported at $1.19B versus the estimate of $1.58. The company also noted that sales were down 56% year-over-year. Despite these poor results, BlackBerry said that 4.3 million smartphones were sold through to end customers. In addition, the company announced a five-year deal with Foxconn, expecting non-cash pretax charges $4.6 billion. Blackberry reported that they are focused on turning profitability in FY16.

MKM Partners analyst Michael Genovese maintained a Neutral rating on BlackBerry and increased the price target from $6.00 to $6.75. MKM commented on his confidence in the new management and the company's progress in lowering opex and reducing inventories and purchase commitments.

Genovese commented, “We are maintaining our Neutral rating following weak 3QFY14 results and the brief but frank strategy discussion by new CEO John Chen. Hardware units and revenues, Service revenues, GMs and EPS all badly missed our estimates. We are also negative on BlackBerry's commitment to remain in the Hardware business, as evidenced by its new 5-year strategic agreement with Foxconn, although the new arrangement will likely provide financial benefits compared to the present mode of Hardware production.”

Evercore analyst Mark McKechnie was also optimistic following the press release. McKechnie maintained an Equalweight rating and raised the price target from $6.50 to $7.00. The analyst is optimistic on John Chen's focus on highly secure enterprises and comprehensive reorganization plan, including the outsourced handsets to Foxconn. Evercore has a concern with the “fundamental conflict” between hardware and services as BlackBerry competed with Google's Android in devices and Apple's iOS.

RBC analyst Mark Sue was not as hopeful following the earnings report. Sue commented that BlackBerry's results were “worse than depressed expectations” and the “lack of clear strategy” will weigh on shares. The analyst added that the recognized smartphone shipments of 1.9 million missed RBC estimate of 3.3 million and noted that the cash burn implies more future layoffs.

BlackBerry closed at $6.25 on Thursday. Shares of BlackBerry were up as much as 17.4% following the report on the Foxconn partnership.

Posted-In: Evercore Partners Mark McKechnie Mark Sue Michael Genovese MKM PartnersAnalyst Color Price Target Analyst Ratings


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