BlackBerry Ltd (BBRY) Stock Surges on Improved Financial Results

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) showed early signs of recovery as the struggling Canadian smartphone manufacturer reported improved quarterly financial results that beat the estimates of Wall Street analysts. Its stock price surged more than 9% to $9.09 per share today.

Financial results

For the first quarter that ended May 31, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) generated GAAP net income of $23 million or $0.04 earnings per share including non-cash income associated with the change in the fair value of debentures of $287 million and pre-tax restructuring charges of $226 million related to its Cost Optimization and Resource (CORE) program.

Excluding one-time non-cash accounting gain and restructuring charges, the Canadian smartphone manufacturer incurred losses of $60 million or $0.11 losses per share, better than the $0.25 losses expected by analysts, according to data compiled by Thomson Reuters I/B/E/S.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) said its revenue for the quarter was $966 million, down by 1% of $10 million from its $976 million revenue in the same period a year ago.

During the period, the company’s reduced its operating expenses by 57% year-over-year and 13% quarter-over-quarter, Its adjusted gross margin increased from 43% to 48%. BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) ended the quarter with $3.1 billion in cash and investments, up from $2.7 billion in the previous quarter.


The Canadian smartphone manufacturer said it revenue from its hardware business accounts 39% of its total revenue. During the quarter, its hardware unit generated revenue from approximately 1.6 million BlackBerry smartphones compared with 1.3 million in the previous quarter. The company said it was able to sell 2.6 million BlackBerry smartphone to end customers.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) successfully launched its low-cost BlackBerry Z3 Jakarta Edition in Indonesia and plans to introduce the device in eight more countries. According to the company, the BlackBerry Z3’s sales performance is strong in Indonesia.

Clear profitability target

In a statement, BlackBerry CEO John Chen said, “Our performance in fiscal Q1 demonstrates that we are firmly on track to achieve important milestones, including our financial objectives and delivering a strong product portfolio. Over the past six months, we have focused on improving efficiency in all aspects of our operations to drive cost reductions and margin improvement. Looking forward, we are focusing on our growth plan to enable our return to profitability

Commenting on the performance of the company, BGC analyst Colin Gillis said, “The short trade is over in this name, for now. They’ve got enough liquidity, and they’ve given us clear profitability targets.”

On the other hand, Ittai Kidron, analyst at Oppenheimer & Co. commented, “We’re encouraged by the stabilization and are increasingly comfortable BlackBerry will successfully emerge from this massive reclamation project.”