The original inventor of smartphones, Blackberry (BBRY, Financial) is already on a turnaround program to aid its generating profits in the long term. The Canadian smartphone player is slated to report its third-quarter earnings on December 19, and analysts and investors are already busy speculating the stock movement and addressing the fact of whether the smartphone market player would be able to sustain itself in the fast-changing mobile world. Let’s get into the details of what could be the expectations and what the Street is speaking about the possible outcome from the earnings.
Device sales to serve as the driving force
The company has raised hopes of a surprise quarter, and the company’s new CEO who took over the management reins last November has stated that he hopes to return the company to profitability in the next two fiscal years. As per data provided by ebscer.com of the Blackberry devices selling in the market, the Blackberry Passport device sales reached 5.4% of Blackberry’s 10 devices used in November, which was significantly higher than 4.1% recorded in October. On the same lines, the Z3 sales reached nearly 4.4% this November, up from 2.1% in October. Such data clearly indicates that the management is taking adequate steps to upgrade its new devices so that they can garner remarkable market share soon after their market launch.
This data has made investors bold enough to expect that the company could report close to 3 million smartphone sales in the third quarter. Hence, we might witness a 25% sales growth rate from 2.4 million recorded in the second quarter of the year.
Expectations of analysts’ show signs of optimism
Since Blackberry has been incurring losses for a couple of quarters, the first point that would come to the mind is whether it would be able to break the rule and report profits in the quarter. But on average, Wall Street analysts’ expect Blackberry to incur a loss of $0.05 a share on revenues of $959.54 million for the third quarter.
In fact, the analyst estimate is far better than the actuals seen in the past quarter when Blackberry reported a loss of $0.67 a share on revenue of $1.19 billion.
With sales expected to grow sequentially in the third quarter, there is every possibility that Blackberry could eventually surprise investors.
As Blackberry is pursuing the turnaround program and plans to become cash rich by 2015, analysts are upbeat on the earnings that would get posted this Friday. The company probably needs to report a $0.02 per share loss this quarter to gain a positive reaction from market participants.
Conclusion
Though the final results will provide all the major highlights, it's vital that Blackberry at least matches if not exceeds the analysts’ predictions on its top and bottom line. That would serve as an indicator that the company is growing and send a sense of relief down the spine of its investors.
