Earnings preview: With recovery on track, BlackBerry looks future perfect

BlackBerry Limited (BB), the once-thriving smartphone maker, is passing through a crucial phase of its transition to an IT solutions provider. Though the pace of changeover was encouraging in the recent quarters, when the software and services business accounted for about three-fourths of total revenues, investors were disappointed with the numbers.

Shareholders might not find it a wise option to hold on to BlackBerry’s shares if the current trend persists. It needs to be noted the stock suffered big losses after the previous two earnings reports, despite above-consensus results.

When the Waterloo-based tech firm unveils its second-quarter results on Friday at 7:00 AM ET, expectations are high as usual. Wall Street is looking for earnings of $0.01 per share on revenues of $209.4 million, lower than the numbers realized in the corresponding quarter last year.  In the present condition, expecting a full-fledged recovery in the near future will be too optimistic, especially when the company is still incurring losses on a reported basis.

Shareholders might not find it a wise option to hold on to BlackBerry’s shares if the current trend persists

However, BlackBerry has what it takes to boost the morale of long-term investors. There is no doubt the turnaround strategy adopted by the management, after exiting the handset business, was a well-conceived one.

Currently, Mobile security and enterprise software, which forms a major part of BlackBerry’s new area of operation, is among the fastest-growing businesses worldwide. The company, which has found a place among the top vendors in all the segments it operates, is also venturing into the emerging fields of the internet of things (IoT) and autonomous driving. Moreover, BlackBerry has improved its capital position significantly over the years, which provides for strategic investments going forward.

After learning an important lesson the hard way – that one should keep eyes open to the changing market conditions – BlackBerry is unlikely to repeat the mistake it committed while ruling the handset market. So, it’s just a matter of time before it bounces back and regains the lost glory, and that calls for patience among the stakeholders.

BlackBerry’s shares made noticeable gains at the beginning of the year, after falling to a multi-year low. The stock retreated gradually and lost about 24% since then. After opening lower Thursday, it traded flat most of the regular session.

BlackBerry tops Q1 estimates; net loss widens