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BlackBerry (BB) Up on Q3 Earnings & Sales Beat, View Intact

Zacks Equity Research

Shares of BlackBerry Limited BB have gained 12% to $12.17 at the close of trading on Dec 20 following the release of third-quarter fiscal 2018 (ended Nov 30, 2017) earnings report. The company reported earnings per share (excluding 55 cents from non-recurring items) of 3 cents, comparing favorably with the Zacks Consensus Estimate of a loss of a penny. Moreover, the bottom line expanded 50% year over year. Results were boosted by robust software sales.

Results in Detail

Total revenues (on a reported basis) in the quarter under review were $226 million, down 24.9% year over year. While total adjusted revenues came in at $235 million. The Zacks Consensus Estimate for the metric was pegged at $216 million.

Segment-wise, Enterprise software and services generated approximately 45.1% of the revenues while BlackBerry Technology Solutions contributed 18.3%. Licensing, IP and other raked in 21.3% of the sales, whereas Handheld devices contributed 3.8%. Services access fees revenues accounted for the balance. Also, the company had around 3,000 enterprise clients on board in the reported quarter.

Geographically, North America has contributed 58.9% of the total revenues. While Europe, the Middle East and Africa have notched up 30.5% of the revenue pie. Similarly, Latin America and the Asia-Pacific regions have yielded 1.3% and 9.3%, respectively, of the total revenues in fiscal third quarter.

Quarterly operating income (on an adjusted basis) came in at $16 million compared with $12 million in the year-ago quarter.

The company exited third-quarter fiscal 2018 with cash and cash equivalents of $529 million compared with  $734 million at the end of fiscal 2017. Long-term debt in fiscal third quarter was $816 million in comparison to $591 million at the end of fiscal 2017.

BlackBerry Limited Price, Consensus and EPS Surprise


BlackBerry Limited Price, Consensus and EPS Surprise | BlackBerry Limited Quote


The company’s guidance for fiscal 2018 remains unchanged. It continues to expect revenues (adjusted) in the range of $920-$950 million. The company hopes that this metric for the stipulated period will lie in mid to high end of the range, given its strong performance so far in the fiscal. The Zacks Consensus Estimate for fiscal 2018 revenues stands at $930 million. Software and Service revenues are estimated to rise between 10% and 15% for fiscal 2018. Also, BlackBerry maintains its prior view of profitability (on an adjusted basis) as well as projects a positive free cash flow during the same time frame.

Zacks Rank & Key Picks

BlackBerry carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Vodafone Group PLC VOD, PLDT Inc. PHI and SK Telecom Co., Ltd. SKM. While Vodafone sports a Zacks Rank #1 (Strong Buy), PLDT and SK Telecom carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Vodafone, PLDT and SK Telecom have gained more than 27%, 9% and 29%, respectively, in a year.

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