BlackBerry reported narrower than expected loss in the
second-quarter of fiscal 2015. Revenues were in line with the Zacks
Consensus Estimate. Declining smartphone sales, stiff competition
from handset manufacturers, lackluster operating platform and a
change in business model will continue to act as headwinds for the
company. However, a healthy balance sheet, an extensive patent
portfolio, launch of the BES12 platform, presence in over 147
countries, the partnership with Foxcon and the agreement with
Secusmart are likely to foster growth while moving ahead. Moreover,
implementations of effective cost-control measures, divestiture of
unprofitable units and targeting the highly populated markets of
India and China will not only drive margins but will also boost
cash flow going forward. Hence, we maintain our Neutral
recommendation on the company.
BlackBerry Limited (BBRY), headquartered in Waterloo, Ontario
(Canada), designs, manufactures, and sells wireless solutions to
the mobile communications market. Through the development and
integration of hardware, software, and services, BlackBerry
provides solutions for seamless access to time-sensitive
information, including e-mail, messaging, as well as Internet and
Intranet-based applications. The company's offerings also enable
third-party developers and manufacturers to enhance their products
and services with proprietary wireless connections. BlackBerry's
product portfolio includes the BlackBerry line of wireless email
devices, embedded radio modems and software development tools.
The company reports in three business segments as follows:
Hardware: This segment offers a wide range of BackBerry
smartphones. These are communication tools that use wireless,
push-based technology to deliver both business and consumer
applications to mobile users. The segment accounted for 60% of the
total revenue in fiscal 2013.
Services: This segment is related to the monthly access billing
charges to the company's carrier partners, based on BlackBerry's
subscriber account base. BlackBerry's service revenues are
generated by charging a monthly infrastructure access fee to a
carrier or reseller, who in turn, bills the end customer. The
segment generated around 35% of the total revenue in fiscal
Software and Other: Software revenues include fees from licensed
BlackBerry Enterprise Server software and BlackBerry Client Access
Licenses, BlackBerry Solution Services and upgrades. In addition,
this segment also generates revenues from both BlackBerry
Professional Software and BlackBerry mobile-voice services. Other
revenues are generated from BlackBerry technical support services,
non-warranty repairs and maintenance program, and some
non-recurring engineering revenues based on the completion of
specific contracts. The segment generated around 5% of the total
revenue in fiscal 2013.
Blackberry Limited (BBRY): Read the Full Research
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