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BlackBerry Q3 Loss Narrower than Expected, Revenues Beat

Canadian handset manufacturer BlackBerry LimitedBBRY reported third-quarter fiscal 2016 financial results wherein both the top and the bottom line surpassed the Zacks Consensus Estimate. Moreover, revenues at the Software and technology licensing segment improved 183% year over year in the quarter under review.

Results in Detail

BlackBerry reported a loss of 17 cents per share in the third quarter compared with 28 cents per share in the year-ago quarter. However, adjusted loss per share of 6 cents was narrower than the Zacks Consensus Estimate of a loss of 20 cents.

Total revenue in the reported quarter stood at $548 million, down 30.9% year over year. However, the top line outpaced the Zacks Consensus Estimate of $485 million. Segment-wise, Hardware revenues contributed approximately 40%, Services access fees revenues accounted for 31% while 29% came from Software and Services licensing.

Geographically, North America contributed 50.2% to the total revenue while Europe, the Middle East and Africa accounted for 35.4% of the figure. Similarly, the Latin America and Asia Pacific regions generated 4.4% and 10% of the total revenue in the quarter, respectively. Quarterly operating loss stood at $104 million compared with $139 million in the year-ago quarter.

At the end of the first nine months of fiscal 2016, BlackBerry generated $257 million of cash from operations compared with $603 million in the same period last fiscal. Free cash flow, in the reported period, stood at $232 million compared with $532 million in the same period last fiscal.

At the end of the first nine months of fiscal 2016, cash and marketable securities totaled $2,298 million as against $2,891 million at the end of fiscal 2015. Long-term debt in third-quarter 2016 totaled $1,317 million compared with $1,707 million in the prior-year quarter.

Outlook

BlackBerry, presently a Zacks Rank #3 (Hold) stock, expects to generate positive free cash flow and adjusted EBITDA in 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 Alphabet Inc.'s GOOG Android software, which was an instant hit.

Meanwhile, BlackBerry recently launched its much-awaited Android-based handset PRIV. The device has already witnessed significant market response and is expected to mitigate losses at the company's smartphone business.

BlackBerry has also been exploring several alternate business options which should help it to offset escalating losses at its smartphone segment. 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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