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- MORGAN STANLEY & CO. LLC
James E Faucette
June 21, 2018
BlackBerry Ltd
May'18 Earnings Preview
Plenty of room to continue maintaining optionality/cash flow, but the growth pieces need to start coming into place to meet FY20 expectations.
We expect Q1 results to continue demonstrating cost flexibility, but investments need to meet long-term growth expectations. Our Q1 rev. / EPS estimates of $195mm / $0.02 are below consensus on revenue but above on earnings ($208mm / $0.00). We believe consensus revenue estimates are too high mostly due to software revenue timing under ASC606. We expect BlackBerry to continue demonstrating optionality ahead of potential growth opportunities: the company still maintains a large workforce, and we expect continued cuts to preserve cash flow and earnings. But as we noted from the meetings we hosted with IR, the company is focusing on getting the right go-to-market teams in place across its business lines, which we believe was directly related to the consistently disappointing revenue performance in recent history. With the stock trading at 5x consensus FY20 revenue, and high expectations for QNX and enterprise software, we think the company will have to begin demonstrating traction with growth opportunities on its current opex trends.
Things to watch for in FY19: new IP licensing deals, RADAR traction, ESS growth. Our current IP licensing revenues of $180mm contemplates around $40mm in new one-time licensing agreements. Any developments on new deals or visibility into new deals will be a focus area. In BTS (BlackBerry Technology Solutions), QNX autos is expected to ramp only modestly this year, ahead of a larger step up in FY20. In the meantime, RADAR will represent the larger incremental for BTS and we estimate it to grow from $2mm in FY18 to $12mm in FY19 mostly on new device sales. Near-term enterprise software results will be negatively affected by ASC606 accounting, but we are forecasting 15% YoY growth for the full year, which we believe will depend on traction with recently acquired software assets.
BB.N
Our PT is $10 which is 4x FY20e revenue, a slight premium to our coverage universe on a growth adjusted basis to account for near-term share gain opportunities in autos.
Risks to achieving our price target include auto OEMs and technology providers pursuing connected car/ADAS platforms, cash burn on major acquisitions and a return to operating loss as legacy businesses phase out.06-21-18 06:10 AMLike 6 - Not certain what the (negative) impacts of the new Accounting rules will be but these analysts all have very low Rev projections this quarter... hope they are wrong...still hoping for $270m actuals for a big beat.
Posted via CB1006-21-18 06:25 AMLike 4 - https://globenewswire.com/news-relea...-Vehicles.html
BlackBerry to Power BYTON’s Innovative In-Car Experience for its Production Vehicles06-21-18 07:17 AMLike 6 -
- BLACKBERRY LIMITED ( T.BB ) stock message board and forum - Bullboard Discussion - Stockhouse Community
Forecasts a big beat with Rev $270m...Wall Street expecting $210m, .fyi
Second point: with Canadian Dollar approaching $1.33 vs US $, and most of BlackBerry expenses (personnel) paid in $Can, and Sales in $US, should this not help as far as profitability?
Posted via CB10
This is another perfect example, the first being the idea that "out of court settlement" = "tried and proven in court" which got bandied about here last week but we never saw any more proof than it was just someone being over enthusiastic about the settlement and equating that to 'proven'.
The biggest issue I take here is that he took last quarters IP of 58m, which as the highest of any of the 8 quarters he referenced, and likely ever, and used that as the new baseline, and added the 40m Avaya on top of that. We already know from Chen said IP would be lumpy, so why would you consider Q4's IP to be the new floor instead of better than average? In this case we have a number in advance (40m), where as other Qs we knew there would be something (Blu, Timex etc), but didn't have a number.
Then there is the recent doubling of QNX installs from 60->120m. Not here, but I've seen on stock twits people thinking that means that BTS rev from QNX will therefore double, just ignoring that those installs have been accounted for in the revenue already, and partially what accounted for its growth in the last couple years.
In short, it just seems like people are eager to 'double count' certain things. It seems for the sake of optimistic enthusiasm, people are not only counting chickens before they hatch, but also after, and adding the two together. I'd just be wildly cautious about doing so to avoid disappointment.
It just seems to be a bad cycle, Someone makes an overly optimistic prediction-> gets reposted here as potential news -> gets picked up by a third party site as actual news -> Then is referenced as fact. The idea that Walmart is using Radar is a perfect example. There was not wholly unjustified suspicion they might be testing it, Someone extrapolates that they *are* testing it, someone else takes that to mean they are *using* it, and finally someone says that walmart is a customer, and then certain people take that one random article as proof and report it endlessly.
https://www.nasdaq.com/article/black...xpect-cm851532
Rather than questioning the source and numbers and accepting the possibility of optimistic Chinese telephone, some people are keen to parrot these articles because it's what they want to hear.06-21-18 03:34 PMLike 4 - While I don't agree with everything from the bear camp, I would be highly cautious about succumbing to hubris and the blind cheer leading which they rail on and on about.
This is another perfect example, the first being the idea that "out of court settlement" = "tried and proven in court" which got bandied about here last week but we never saw any more proof than it was just someone being over enthusiastic about the settlement and equating that to 'proven'.
The biggest issue I take here is that he took last quarters IP of 58m, which as the highest of any of the 8 quarters he referenced, and likely ever, and used that as the new baseline, and added the 40m Avaya on top of that. We already know from Chen said IP would be lumpy, so why would you consider Q4's IP to be the new floor instead of better than average? In this case we have a number in advance (40m), where as other Qs we knew there would be something (Blu, Timex etc), but didn't have a number.
Then there is the recent doubling of QNX installs from 60->120m. Not here, but I've seen on stock twits people thinking that means that BTS rev from QNX will therefore double, just ignoring that those installs have been accounted for in the revenue already, and partially what accounted for its growth in the last couple years.
In short, it just seems like people are eager to 'double count' certain things. It seems for the sake of optimistic enthusiasm, people are not only counting chickens before they hatch, but also after, and adding the two together. I'd just be wildly cautious about doing so to avoid disappointment.
It just seems to be a bad cycle, Someone makes an overly optimistic prediction-> gets reposted here as potential news -> gets picked up by a third party site as actual news -> Then is referenced as fact. The idea that Walmart is using Radar is a perfect example. There was not wholly unjustified suspicion they might be testing it, Someone extrapolates that they *are* testing it, someone else takes that to mean they are *using* it, and finally someone says that walmart is a customer, and then certain people take that one random article as proof and report it endlessly.
https://www.nasdaq.com/article/black...xpect-cm851532
Rather than questioning the source and numbers and accepting the possibility of optimistic Chinese telephone, some people are keen to parrot these articles because it's what they want to hear.
Posted via CB10techvisor likes this.06-21-18 03:47 PMLike 1 - Hah. I've been long this stock for 5+ years, but tripled down about 3 years ago, and currently have some 40% of my net worth tied up here with an average around $10US which varies as I have shares in both currencies. I've tossed around the idea of making income selling calls, but fear this is the kind of company that could be ripe for a huge move one day. Similarly I considered (and regretted not) buying puts around $14 simply because I know how volatile this stock is, but don't have the guts to straight up hop in and out like some people here for the same reason above, fearing being out of the stock during a huge move.
I share the frustrations of many here, as I truly believe that this company has some amazing potential, but also that it has a unique set of challenges given it's history, among the worst, it can't afford the misstep of failing to meet and exceed any numbers as it's already depleted it's bank of "trust me it will work out" over the last 10 years. Look at what happened last Q. Beats all around, and the stock plummeted because people simply looked for the gray cloud in a silver sky and took the most pessimistic interpretations possible of Chen's comments.
The danger I was referring to is that intentionally pushing these sorts of articles is recklessly negligent at best. If you spend 10 minutes to look at the history and source of these sorts of articles, you see that they're most likely a series of optimistic mistakes compounded on top of each other. So why post them? In the hopes that heaps of others who don't do their DD buy in getting a temporary lift?
Just because someone else says that walmart is a Radar customer, or that FB patents have been tested in court, and BTS rev is set to double and it's almost plain as day that it's exaggerated, doesn't mean you're clear to spam it to the wide world, as by creating this expectation in the long run it hurts the cause by just giving more ammo to the shorts about lies, misleading comments, and missed expectations.06-21-18 05:00 PMLike 3 - Hah. I've been long this stock for 5+ years, but tripled down about 3 years ago, and currently have some 40% of my net worth tied up here with an average around $10US which varies as I have shares in both currencies. I've tossed around the idea of making income selling calls, but fear this is the kind of company that could be ripe for a huge move one day. Similarly I considered (and regretted not) buying puts around $14 simply because I know how volatile this stock is, but don't have the guts to straight up hop in and out like some people here for the same reason above, fearing being out of the stock during a huge move.
I share the frustrations of many here, as I truly believe that this company has some amazing potential, but also that it has a unique set of challenges given it's history, among the worst, it can't afford the misstep of failing to meet and exceed any numbers as it's already depleted it's bank of "trust me it will work out" over the last 10 years. Look at what happened last Q. Beats all around, and the stock plummeted because people simply looked for the gray cloud in a silver sky and took the most pessimistic interpretations possible of Chen's comments.
The danger I was referring to is that intentionally pushing these sorts of articles is recklessly negligent at best. If you spend 10 minutes to look at the history and source of these sorts of articles, you see that they're most likely a series of optimistic mistakes compounded on top of each other. So why post them? In the hopes that heaps of others who don't do their DD buy in getting a temporary lift?
Just because someone else says that walmart is a Radar customer, or that FB patents have been tested in court, and BTS rev is set to double and it's almost plain as day that it's exaggerated, doesn't mean you're clear to spam it to the wide world, as by creating this expectation in the long run it hurts the cause by just giving more ammo to the shorts about lies, misleading comments, and missed expectations.
Posted via CB10rampagingpanda and morganplus8 like this.06-21-18 05:36 PMLike 2 - https://crackberry.com/punkt-mp02-bl...CiPP0aKcFDi.97
Punkt preparing to launch 4G MP02 phone that uses BlackBerry's security technology
06-21-18 07:32 PMLike 3 - Looking forward to tomorrow's results. For five years now, I've had a childish excitement on the eve of every ER. BlackBerry has been a thrilling roller coaster ride and learning experience.
Big thanks to all the regular contributors. I read every day, but my input pales in comparison to all of you. As I await the flurry of news, updates and analysis, I want to wish everyone good luck!
Special shout-out to Morgan for his unwavering dedication to us, and to wish him the best in his health. The impact on my life that you have is immeasurable, and undoubtedly positive.
See you all tomorrow for the celebration!06-21-18 08:45 PMLike 7 - Yeah. Nice string of messages fellas. Thanks for that.
For me, tomorrow is either D-day, or O.G.-day.
See you guys on the other side of ER.06-21-18 09:25 PMLike 4 - https://globenewswire.com/news-relea...r-Results.html
BlackBerry Reports Fiscal Year 2019 First Quarter Results
WATERLOO, Ontario, June 22, 2018 (GLOBE NEWSWIRE) -- BlackBerry Limited (NYSE:BB) (TSX:BB), an enterprise software and services company focused on securing and managing IoT endpoints, today reported financial results for the three months ended May 31, 2018 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).
First Quarter Fiscal 2019 Results
- Total company non-GAAP revenue for the first quarter of fiscal 2019 was $217 million with GAAP revenue of $213 million. Total non-GAAP software and services revenue of $193 million, up 14% year- over-year. Total GAAP software and services revenue was $189 million, up 18% year-over-year. Approximately 86% of first quarter software and services revenue (excluding IP licensing and professional services) was recurring, up from approximately 70% in the fourth quarter of fiscal year 2018. Gross margin of 76% (both non-GAAP and GAAP).
- Non-GAAP operating income was $12 million, and positive for the ninth consecutive quarter. GAAP operating loss was $65 million. Non-GAAP earnings per share was $0.03 (basic and diluted). GAAP net loss for the quarter was $0.11 per share (basic and diluted). GAAP net loss includes a charge of $28 million related to the fair value adjustment on the debentures, $22 million in acquired intangibles amortization expense, $18 million in stock compensation expense, $4 million in restructuring charges, and other amounts as summarized in a table below.
- Total cash, cash equivalents, short-term and long-term investments were approximately $2.3 billion as of May 31, 2018. Free cash flow, before considering the impact of restructuring and legal proceedings, was positive $3 million. Cash used in operations was $7 million and capital expenditures were $5 million. Excluding $605 million in the face value of the company’s debt, the net cash balance at the end of the quarter was approximately $1.7 billion.
“We are off to a solid start in fiscal 2019, with 14% year-over-year growth in total software and services revenue driven by strong double-digit billings and an increase in recurring revenue” said John Chen, Executive Chairman and CEO, BlackBerry. “I am pleased that BlackBerry QNX software is now embedded in over 120 million automobiles worldwide, doubling the install base in the last three years. We are very excited about the opportunities ahead of us in automobiles and in other EoT verticals.”
Outlook
BlackBerry’s outlook for fiscal 2019 is as follows:
- Total company software and services billings growth is expected to be double-digits
- Non-GAAP EPS is expected to be positive
- Free cash flow is expected to be positive for the full year, before considering the impact of restructuring and legal proceedings
- Total software and services revenue growth of between 8% to 10% year-over-year
06-22-18 06:33 AMLike 3 - https://globenewswire.com/news-relea...itt-Group.html
BlackBerry Secure to Protect Cat and Land Rover Rugged Smartphones Under New Licensing Agreement Between BlackBerry and Bullitt Group
Future Cat phones and Land Rover connected devices will be BlackBerry SecureLast edited by Corbu; 06-22-18 at 06:54 AM.
06-22-18 06:33 AMLike 3 - https://globenewswire.com/news-relea...r-Results.html
BlackBerry Reports Fiscal Year 2019 First Quarter Results
WATERLOO, Ontario, June 22, 2018 (GLOBE NEWSWIRE) -- BlackBerry Limited (NYSE:BB) (TSX:BB), an enterprise software and services company focused on securing and managing IoT endpoints, today reported financial results for the three months ended May 31, 2018 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).
First Quarter Fiscal 2019 Results
- Total company non-GAAP revenue for the first quarter of fiscal 2019 was $217 million with GAAP revenue of $213 million. Total non-GAAP software and services revenue of $193 million, up 14% year- over-year. Total GAAP software and services revenue was $189 million, up 18% year-over-year. Approximately 86% of first quarter software and services revenue (excluding IP licensing and professional services) was recurring, up from approximately 70% in the fourth quarter of fiscal year 2018. Gross margin of 76% (both non-GAAP and GAAP).
- Non-GAAP operating income was $12 million, and positive for the ninth consecutive quarter. GAAP operating loss was $65 million. Non-GAAP earnings per share was $0.03 (basic and diluted). GAAP net loss for the quarter was $0.11 per share (basic and diluted). GAAP net loss includes a charge of $28 million related to the fair value adjustment on the debentures, $22 million in acquired intangibles amortization expense, $18 million in stock compensation expense, $4 million in restructuring charges, and other amounts as summarized in a table below.
- Total cash, cash equivalents, short-term and long-term investments were approximately $2.3 billion as of May 31, 2018. Free cash flow, before considering the impact of restructuring and legal proceedings, was positive $3 million. Cash used in operations was $7 million and capital expenditures were $5 million. Excluding $605 million in the face value of the company’s debt, the net cash balance at the end of the quarter was approximately $1.7 billion.
“We are off to a solid start in fiscal 2019, with 14% year-over-year growth in total software and services revenue driven by strong double-digit billings and an increase in recurring revenue” said John Chen, Executive Chairman and CEO, BlackBerry. “I am pleased that BlackBerry QNX software is now embedded in over 120 million automobiles worldwide, doubling the install base in the last three years. We are very excited about the opportunities ahead of us in automobiles and in other EoT verticals.”
Outlook
BlackBerry’s outlook for fiscal 2019 is as follows:
- Total company software and services billings growth is expected to be double-digits
- Non-GAAP EPS is expected to be positive
- Free cash flow is expected to be positive for the full year, before considering the impact of restructuring and legal proceedings
- Total software and services revenue growth of between 8% to 10% year-over-year
Keep defending one of the worst CEOs of a publich company, he will cost shareholders a lot of money every quarter over his next four year term.
And the best thing: instead of a huge annoucement of a huge new QNX customer he delivers some BS about Land Rover rugged smartphones. WTF?techvisor likes this.06-22-18 07:00 AMLike 1 - so, I've read the new accounting rules actually made their revenue less than they would have appeared last ER.
can someone help me understand that.
thanks all06-22-18 07:23 AMLike 0 -
...read that just now but perhaps someone can confirm this. And also, where is $40m avaya?
Posted via CB1006-22-18 08:22 AMLike 0 -
But I give a s**ht since my short worked out well. Was free lunch since John Chen never dissapoints when its comes to defraud shareholderstechvisor likes this.06-22-18 09:00 AMLike 1 - For what it's worth, on June 6 we hit RSI=72 and a share price of $12.50 and currently the share price has just hit $10.75 and an RSI=30.06-22-18 09:05 AMLike 4
- https://www.theglobeandmail.com/busi...ontinues-data/
BlackBerry sees software, services growth as shift continues to data security sector
BlackBerry Ltd. saw continued growth in its software-and-services revenue last quarter as it treaded further from its smartphone roots into the world of data security.
Despite the company posting a loss and a drop in revenue for the quarter that ended in May, it revealed US$189-million in software-and-services revenue. That figure was up 18 per cent year-over-year and represented 89 per cent of the company’s total revenue – versus 68 per cent a year ago.
In five of the six previous quarters, BlackBerry’s share price made double-digit moves in one direction or the other within the seven trading days after reporting financial results. Friday saw a continuation of that volatility, as investors shoved the price down more than 8 per cent shortly after markets opened.
The software division is the key to the company’s multi-year turnaround plan, and includes its QNX autonomous- and connected-car platform that chief executive officer John Chen said Friday was now in 120 million vehicles worldwide, doubling in the past three years. While BlackBerry-branded KEY2 smartphones recently hit the market and will soon be available in Canada, the company now outsources the manufacturing of its handheld devices, and that division brought only US$8-million last quarter – down from US$37-million in 2017.
BlackBerry is betting its future on this transition to securing data transmission through software for larger enterprise, car-manufacturing and government clients, and on Mr. Chen, after falling behind in the smartphone wars earlier this decade to the offerings of tech giants Apple Inc. and Alphabet Inc. At the company’s annual meeting earlier this week, more than 90 per cent of shareholders voted in favour of a compensation package that could net the CEO more than US$400-million over the next five years if he reach a number of goals, including getting its U.S.-listed shares over US$30. They sat at US$10.74 short after markets opened Friday.
About 86 per cent of its software-and-services income was recurring – a revenue model Mr. Chen said on a conference call with analysts Friday, that gives the company greater predictability and aligns with the company’s long-term strategy. “Our long-term goal is 90-per-cent-plus in recurring software and services revenue, which I believe we can accomplish within a year,” he said.
The company shifted its accounting practices to a new standard for sales reporting this quarter called “ASC 606,” which primarily affects its enterprise software business. Analysts such as RBC Dominion Securities Inc.’s Paul Treiber said should help smoothen BlackBerry’s quarterly revenues and provide better insight into its growth rate.
Chief financial officer Steven Capelli said if the ASC 606 standards were applied to the year-ago quarter, the company would have seen an “apples to apples” revenue drop of 11 per cent. (Total revenue this quarter was US$213-million under ASC 606, and US$235-million under ASC 605, the previous standard, a 9-per-cent apples-to-oranges drop.)
The company’s net loss last quarter was US$60-million, or US$0.11 per share, versus a profit of US$671-million or US$1.23 a year earlier, when it was awarded US$940-million from an arbitration decision with the semiconductor company Qualcomm Inc.
BlackBerry is also trying to strengthen its intellectual property income, filing a lawsuit earlier this year against Facebook, WhatsApp and Instagram over messaging technology. Its IP, licensing and “other” revenue nearly doubled to US$63-million in the quarter. 06-22-18 09:23 AMLike 5 - Hilarious how the CEO of a public company fails to adjust expectations for the impact of a new revenue standard that has been known for years. John Chen is not capable of being the CEO of a public company. The only positive for shareholders: he will not get his 1,000,000 RSUs in November 2018 since by the shares will have barely recovered to 12$ which is way below the strike price of 16$. But maybe Prem Watsa is helping him and just loweres the strike price to 11$.
Anyway I have thank John Chen for the easy money since he again delivered for short sellers. This guy is just a complete failure as CEO. Since next week the NOK hearing is on June 25 I covered my short since a positive Qualcom like outcome could bring the shares back up tp 12$ from where they will continue going down.
Have fun defending John Chen no matter how bad he performs or no matter how much he destroys shareholder value.techvisor likes this.06-22-18 09:59 AMLike 1
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