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BlackBerry: Sales Continue to Deteriorate, Competition Rife

On Sep 28, we issued an updated research report on Canadian handset maker BlackBerry Ltd.BBRY . Notably, the company expects to generate positive free cash flow and non-GAAP earnings in 2016. The company also expects to record decent sequential top-line growth over the next two quarters of fiscal 2016.

Meanwhile, BlackBerry reported second-quarter fiscal 2016 financial results with both the top and the bottom line comparing unfavorably with the Zacks Consensus Estimate.

Despite exploring several alternate business options to mitigate escalating losses in its smartphone business, BlackBerry continues to incur losses. In the recently concluded quarter, the company sold just 800,000 handsets against 2.4 million in the year-ago quarter. Moreover, in the said quarter, the company witnessed a 46.5% drop in revenues from the year-earlier quarter. Lack of a popular operating platform has resulted in such a steep decline in sales.

In addition, the launch of Apple Inc.'s AAPL iPhone and Google Inc.'s GOOG Android-based devices has intensified competition in the smartphone space. Furthermore, availability of low-cost Chinese smartphones has made matters worse for both Nokia Corp. NOK and BlackBerry.

More recently, BlackBerry launched the much-awaited Android device - Priv. However, the company's late entry into the Android space may impede its consolidation plans.

BlackBerry is also gradually shifting its focus to software. As a result, the company is continuously utilizing its cash reserves to acquire companies. Recently, BlackBerry closed the AtHoc acquisition and is planning to buy mobile security firm Good Technologies Ltd. Such acquisitions continue to dent the company's cash position and may also lead to integration risks.

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

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APPLE INC (AAPL): Free Stock Analysis Report

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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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