BlackBerry (NYSE:BB) is set to post first quarter results on Wednesday and investors will keep an eye on guidance, along with updates on ongoing restructuring and cost reduction.
Wall Street expects the Waterloo, Canada-based company to post EPS of -$0.03, while revenue is expected to be $134.05 million, representing a fall of over 60%.
Earlier in April, the company’s fourth quarter results beat analysts’ estimates. However, its quarterly sales guidance came below expectation.
Although the company benefited from its cybersecurity division during the fourth quarter, it still faces competition from deep pocketed rivals like Microsoft, who is aggressively investing in new technologies including AI.
RBC said it expects the quarter to be in line with consensus and guidance, but profitability could surprise to the upside, like the last several quarters. The brokerage forecast IoT revenue to fall 10% Y/Y, while cybersecurity is expected to drop 14% Y/Y to $80 million.
Seeking Alpha analyst Dilantha De Silva said lack of R&D investments may lead to BlackBerry’s cybersecurity products going out of sync with current market requirements.
Seeking Alpha analysts and Wall Street are cautious and rated the stock as Hold, while Seeking Alpha’s Quant ratings consider it a Sell, with a score of 1.57 out of 5.
“We expect management to provide an update on the separation of the IoT and Cybersecurity business units and ongoing restructuring efforts, including a possible timeframe for segmented financials,” RBC analyst Paul Treiber, adding that until BlackBerry’s business stabilizes and the market gains confidence in a sustained move to profitability, valuation is expected to remain under pressure.
Over the last two years, BlackBerry has beaten EPS estimates 100% of the time and has beaten revenue estimates 75% of the time.
Over the last three months, EPS and revenue estimates have seen no upward revisions, compared to five downward revisions for EPS and four for revenue.
U.S.-listed shares of the once-iconic device maker lost nearly 37% so far this year, compared to the over 14% gain in the broader S&P500 Index.