BlackBerry Ltd (NASDAQ:BBRY) stock traded downwards yesterday after a mixed earnings report showed substantial year over year revenue decline
BlackBerry Ltd’s (NASDAQ:BBRY) earnings beat expectations but the company missed consensus for revenue in the fourth quarter by an alarming margin resulting in a 7.54% decline in the stock’s price. Blackberry reported loss per share of only $0.03, beating the Street’s expectations by $0.07. However, this did in no way detract from the fact that the company’s revenue declined 26.2% year over year to $487 million and missed the consensus by $76.18 million.
Blackberry continues to transition away from hardware and focus on its more profitable software and services business which grew to contribute 32% of the company’s total revenue. In fact, revenue from licensing and software combined was more than the company’s $500 million outlook. Blackberry expects its focus on software and services to continue to create tailwinds for its business with 30% growth expected this year and guidance for positive cash flow.
The revenue miss, however, was squarely blamed on smartphone sales which missed quarterly projections due, in part, to negotiation delays with mobile networks. Despite the $238 million loss this quarter, down from the $28 million profit last quarter, CEO John Chen conveys confidence that cost cutting measures will help the company to breakeven in mobile segment. However, Samsung and Apple have almost driven Blackberry out of the market for high-end mobile devices, with the company now having less than a percent of market share. Analysts are looking for a hardware exit from the company which has already started rolling out a number of IoT focused products. Software and services segment will continue to grow and IoT will provide diversification to the company’s portfolio along with a foot into highly lucrative market segments such as the automobile industry. Blackberry is still transitioning, hopefully parting ways with its expensive hardware segment.