Blackberry Turns Bearish after Missing Revenue Estimates of Q1 2018

Blackberry - RIMBlackberry Limited (NASDAQ: BBRY) which is an enterprise software company reported a net gain in the 1st quarter of the fiscal year 2018 as compared to the loss experienced during the same period last year. It is interesting to note the reports surpassed the estimates of the analysts.

However, in the last week, the stocks dipped low more than 10% and closed at $9.71. Hence, we expect the shares of Blackberry to decline further, and the reason for the same is discussed below.

On the other hand, Waterloo which is an Ontario-based company has registered a whopping decline worth $165 million in Q1 revenue to $235 million from $400 million during the same period in fiscal 2017.

During the recent quarter, the non-GAAP revenue was $244 million, and it was down from $424 million in the same quarter last year. The figure is way below the expectations of the Wall Street which was $262.8 million.

BlackBerry

For the quarter ending in May 2017, the net income was $671 million which translates to $1.26 per share. During the similar period last year, the net loss was $670 million or $1.28 per share. If we exclude the charges from Q1 2018, the Non-GAAP net income comes to $10 million or $0.02 per share. During the Q1 2017, the Non-GAAP net loss was $1 million or break even share.

The company has received a payment worth $940 million during the recent quarter from the US chipmaker Qualcomm Inc., based on the result of an arbitration proceeding.

To settle the dispute over a licensing deal, both the companies had approached an arbitrator. It includes regular payment from Blackberry to Qualcomm. According to the Arbitrator, there was an overpaid royalty fee paid by Blackberry to the latter company from 2010 to 2015. Qualcomm’s payment helped the company to get back into profit.

There was a decline of 3000 order received from the enterprise customers in the quarter. During the previous quarter, the number of orders received was 3500.

Blackberry that had earlier carved a niche for itself as an iconic mobile phone is now a software firm that promotes products like Cyber Security Shields and QNX Automobile Platform. In 2016, the company declared that it would invest around $75 million over the next few years for the development of a self-driving car hub. Blackberry is trying to enter the market and expand its software offerings for automotive industry and healthcare. In this regard, Blackberry has strengthened its software portfolio through some different acquisitions.

The company has maintained its outlook for the fiscal year 2018 and stated that it is looking forward to gaining profits on a Non-GAAP basis. Blackberry also anticipates for generating positive free cash flow in the next financial year after removing the payment benefit from Qualcomm. However, the analysts expect the company to post a loss of $0.02 per share on the total revenue of $248 million in this current quarter. Hence, based on the steep decline in enterprise order and income, we can expect the stocks of Blackberry to remain bearish in this current quarter.

On a technical level, the stock of the company has broken below its 50 days moving average. In addition to this, the historical price chart is showing resistance at 10.65. The MACD histogram’s negative reading indicates the weak momentum. Hence, we speculate the stocks of the company to decline further.

Blackberry Stock Price June 27th 2017

Blackberry Stock Price June 27th, 2017

As a trader, if you want to benefit from the downtrend of Blackberry’s stocks, you need to BUY a PUT Option with an expiry period of 1 week. For minimising the risks, it is recommended to select the option when the stock is trading around $10.50 on NASDAQ.

Rich Archer

Rich Archer

Hi, my name is Rich Archer. I am living in London. Welcome to Binary Manual. Reach to Binary Options broker reviews and market news here.


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