BlackBerry shares dip after Q1 earnings loss
Shares of BlackBerry (BBRY) fell more than 3% after the embattled smartphone maker announced increased software revenue along with a loss for the first quarter of fiscal year 2016.
Software and technology-licensing revenue of $137 million represented a 150% increase compared to the same period last year.
However, sales of smartphones fell more than 30% to $263 million from $379 million during the same quarter last year.
Earnings for the quarter were lower than expected. BlackBerry's loss of 5 cents per share and revenue of $658 million fell short of Wall Street expectations, according to consensus estimates from Thomson Reuters, of a loss of 3 cents per share on $683.63 million in revenue.
Shares were down 3% Tuesday to $8.91 after rising more than 8% in pre-market trading.
Some of the market movement is due to concern about BlackBerry's 150% increased revenue figure. That's because the company didn't break out how much of the $137 million comes from enterprise software and licensing. Even with software accounting for a 26% uptick in software revenue, BlackBerry is growing a "nice software business," said BGC Financial technology analyst Colin Gillis.
A one-time market leader, BlackBerry has fallen behind other smartphone makers such as Apple and Samsung, holding only about 1% of the handset market. BlackBerry sold about 1.1 million smartphones during the first quarter at an average selling price of $240.
However, the company sees growing potential in its enterprise platform, a business software service that handles Android, iOS and Windows devices, as well as BlackBerrys, and is known for its security.
"The obvious focus is on their software business. That is their core business," Gillis said. "You don't want to be owning this (stock) for the phones, you want to be owning it for the software."
BlackBerry's net income for the quarter was $68 million or 13 cents per basic share, before adjusting for one-time items.
CEO John Chen forecasts a return to profitability during the fiscal year for the company. "Our financials reflect increased investments to sales and customer support for our software business," he said in a statement. "In addition, we are taking steps to make the handset business profitable. We believe these actions are prudent and necessary to grow the business and we believe the remaining milestones in our strategic plan are achievable."
In a note issued Monday previewing BlackBerry's earnings, Gillis said that he expected the first two quarters to be "muted" and maintained a Buy rating on the company.
"For investors, this is a turnaround story," he said Tuesday. "Turnarounds take time."
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