For BlackBerry Ltd Passport, Classic More Vital Than A Software Focus

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) will soon release its new device Passport on the September 24th with a media event scheduled for the same. The ‘Classic’ device will be released in November with another media event scheduled. Recently, analyst Maynard Um at Wells Fargo has reiterated a Market Perform rating of to the company’s shares well ahead of the release of these models.

Passport may command a premium pricing

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) CEO John Chen emphasizes on software as the focus for the company, but Um believes that the new devices would help in increasing the profitability of the company. Um writes that he “believe its hardware launches will be the key driver to achieving near-term profitability and to buying time while the business model shifts.”

The Canadian company is expected to price its new handset Passport on a higher side with base model expected to be available for $700 and the premium models could be priced even higher. The high prices will help the company obtain good gross margins on the sales of Passport units. However, it could negatively affect the “unit elasticity, even for enterprises,” believe Um.

BlackBerry Q2 estimates

The smartphone maker is said to report the second-quarter results on 26th September. According to Um, despite the higher hardware mix and higher operating expense for the launch the guidance for the third-quarter could be better. The losses of the company are continuing from quite some time but Um believes that the cash flow will improve over time.

Wells Fargo analysts have made a forecast for the revenue and per share loss for BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB). The revenue for the second-quarter is expected at $863.4 million while the consensus estimates revenue of $947 million. The loss per share is forecasted at $0.20 compared to consensus estimate of $0.15. Last quarter, there was a pro forma cash burn of $255 million. It is expected that the FCF would improve this quarter. The ASP for BB10 devices was $425, and it is expected by the Wells Fargo analyst that the ASP of Passport could take BB10 devices ASP higher in the November quarter, but the ASP may get impacted by a lower number of units sold.