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Sydnee Gatewood
Sydnee Gatewood
Articles (2102) 

BlackBerry Posts Surprise Profit in 1st Quarter

Despite earnings beat, shares tumble due to revenue miss

June 23, 2017 | About:

Software company BlackBerry Ltd. (BBRY) (TSX:BB) reported its fiscal first-quarter 2018 earnings on June 23, posting an unexpected profit.

The company posted adjusted earnings per share of 2 cents, beating the estimates of 0 cents and improving from last year. The company reported a net profit of $671 million, or $1.23 per share, in the first quarter, up from a $670 million loss, or $1.28 per share, in the year-ago quarter.

Revenue of $244 million, though, failed to meet the consensus of $264.4 million.

Contributing to the miss was sales for the enterprise software and services segment, which declined from $106 million a year ago to $101 million. The company said it received fewer orders from customers in this segment during the quarter, falling from 3,500 orders in the fourth quarter of 2017 to 3,000 orders.

Despite the surprise earnings beat, shares slid 6% in premarket trading after the report due to the revenue miss.

Chairman and CEO John Chen commented on the company’s progress in strengthening its position in cybersecurity and the Enterprise of Things, which are emerging growth markets.

“We secured key design wins in high growth segments of automotive technology, including advanced driver assist, digital instrument cluster and our hypervisor solution,” Chen said. “Our ecosystem is growing with Qualcomm (NASDAQ:QCOM) and NVIDIA (NASDAQ:NVDA) adopting BlackBerry technology for their automotive platforms.”

BlackBerry also reiterated its outlook for fiscal 2018.

“We expect growth at or above the overall market in software and services,” Chen said.

The company also expects to be profitable on a non-GAAP basis and to generate positive free cash flow throughout the year.

Among the gurus invested in BlackBerry, PRIMECAP Management (Trades, Portfolio) is the largest shareholder with 14.3% of outstanding shares. Prem Watsa (Trades, Portfolio), Jim Simons (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), Kahn Brothers (Trades, Portfolio) and Francis Chou (Trades, Portfolio) also own the stock.

With a market cap of $5.2 billion, BlackBerry shares were trading around $9.76 on Friday with a price-book (P/B) ratio of 2.6 and a price-sales (P/S) ratio of 4.

Disclosure: I do not own any stocks mentioned in the article.

About the author:

Sydnee Gatewood
I am the editorial director at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneerg

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