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BlackBerry Q2 Loss Wider than Expected, Revenues Miss

Canadian handset manufacturer BlackBerry LimitedBBRY reported disappointing second-quarter fiscal 2016 financial results with the top line missing the Zacks Consensus Estimate and the bottom line comparing unfavorably. However, Software and technology licensing revenues improved 33% year over year.

Results in Detail

BlackBerry reported loss of 24 cents per share in the second quarter compared with a loss of 39 cents per share in the year-ago quarter. However, adjusted loss per share of 13 cents was wider than the Zacks Consensus Estimate of a loss of 7 cents.

Total revenue in the reported quarter stood at $490 million compared with $916 million in the year-ago quarter. The top line also missed the Zacks Consensus Estimate of $622 million. Segment-wise, Hardware revenues contributed approximately 41%, Services revenues accounted for 43% while 15% came from Software and Technology licensing.

Geographically, North America contributed 36% to the total revenue while Europe, the Middle East and Africa accounted for 41.2% of the figure. Similarly, the Latin America and Asia Pacific regions generated 6.7% and 16.1% of the total revenue in the quarter, respectively.

In the second quarter, BlackBerry sold 800,000 smartphones to end customers. Quarterly operating income stood at $33 million compared with an operating loss of $198 million in the year-ago quarter.

At the end of the first six months of fiscal 2016, BlackBerry generated $244 million of cash from operations compared with $414 million in the same period last year. Free cash flow, in the reported period, stood at $223 million compared with $366 million in the year-ago quarter. Cash and marketable securities generated $3,020 million as against $2,891 million at the end of fiscal 2015. Long-term debt in the quarter totaled $1,322 million compared with $1,707 million in the prior-year quarter.

BlackBerry currently carries a Zacks Rank #5 (Strong Sell).

Outlook

BlackBerry expects to generate positive free cash flow and non-GAAP earnings in 2016. Moreover, the company expects to generate decent sequential top-line growth in the next two quarters of fiscal 2016.

Our Take

Ever since Apple Inc.'s AAPL iPhone hit the market, BlackBerry and Nokia Corp. NOK have been facing intense competitive pressure. The situation got worse with the launch of Google Inc.'s GOOG Android software, which was an instant hit.

Lately, BlackBerry has been exploring several alternate business options which should help the company offset escalating losses in its smartphone business. The company's BES12 platform is also gaining considerable traction.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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