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Blackberry’s Q4 loss narrows, beats estimates

After three years of strenuous attempts, the iconic mobile phone manufacturer Blackberry Limited (NASDAQ: BBRY) seems to have finally succeeded in encrypting a turnaround in its business. Last week, the company reported fiscal 2017 fourth-quarter results that beat analysts’ estimates. Following the results, the stock had so far appreciated by about 12% to $7.80. We anticipate the uptrend to continue due to the facts provided below.

For the quarter ended February 28th, 2017, the Waterloo, Ontario-based company reported GAAP revenues of $286 million, down from $464 million in the quarter ended February 29th 2016. On a non-GAAP basis, the Q4 revenue of $297 million was higher than Wall Street estimates of $289.3 million.

The fourth-quarter GAAP net loss narrowed to $47 million or $0.10 per share, from $238 million or $0.45 per share in the similar period last year. Excluding charges, the company reported a net profit of $0.04 per share in the recent quarter, compared to a net loss of $0.03 per share in the corresponding quarter last year. Analysts on average anticipated Blackberry to report break even per share for the fourth-quarter.


The GAAP gross margin increased to 60.1% in Q4-2017, from 45.3% in Q4-2016. Blackberry is on track to achieve its objective of realizing 80% gross margin in 2018. To improve profitability, the company has signed outsourcing contracts with companies in Indonesia (BB Merah Putih), China (TCL), and India (Optiemus Infracom). Under the agreement, A-Z work related to devices, including design, manufacturing and sales, are taken care of by the Asian companies.

Blackberry is currently focused on developing software (QNX industrial operating system) related to self-driving automobiles. In this regard, the company has entered into a partnership with Ford Motors. The company is also developing mobile device management products.

The fourth-quarter software and services revenue was $182 million and $193 million on a GAAP and non-GAAP basis respectively. More importantly, 80% of these are recurring revenues. The fiscal 2017 software and services revenue not only surpassed the company’s target of $640 million, but also registered a 30% y-o-y growth. The company is hopeful of improving its performance in 2017. Thus, fundamentally, as of now, the stock would remain in a bullish orbit.

The stock is consolidating after opening with a positive gap on the day results were announced. This indicates a possibility of further uptrend. The MACD indicator is also gaining ground above the zero line. So, we can expect the stock to reach the next resistance level of 9.00.

Blackberry Stock Price: April 4th 2017

Blackberry Stock Price: April 4th 2017

To benefit from the analysis, a trader can place a bet on call option offered by a binary broker. To increase the odds of winning the trade, an expiry date around April 12th should be chosen. Additionally, the bet should be made when the stock trades near $7.80 in the equity market.

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