Blackberry Ltd (NASDAQ:BBRY) (TSX:BB): What To Watch In Q3 Results?

BlackBerry Ltd (NASDAQ:BBRY) (TSX:BB) will be reporting results for the third quarter of fiscal 2014 on Dec.20, 2013. A conference call and live webcast will be held beginning at 8 am ET.

Wall Street expects BlackBerry to report a loss of 44 cents a share, according to analysts polled by Thomson Reuters. In the same quarter last year, the company reported a loss of 22 cents a share.

BlackBerry’s bottom-line results have managed to beat Street view thrice in the past four quarters. However, analysts’ have become more bearish on the company’s prospects as the consensus loss estimate has widened by 29 cents over the past 90 days. In the last month, two analysts have cut their profit view on the company.

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Quarterly revenue is expected to fall 41.8 percent to $1.59 billion from $2.73 billion a year-ago. The company’s revenue growth has been lackluster in recent times, with topline improvement of negative 45 percent, positive 9 percent, negative 36 percent and negative 47 percent in the past four quarters, respectively.

BlackBerry is the firm that invented the smartphone market. However, it is now at the receiving end. BlackBerry, which has been losing share to Apple’s iPhone and Google’s Android-based handsets such as Samsung Galaxy brand phones, pinned its hopes on its new line of BlackBerry 10 devices. Unfortunately, those devices got a lukewarm response.

Meanwhile, the September to November period has been an eventful one for the Waterloo, Canada-based company. The Canadian company called off its sale process and raised $1 billion from Prem Watsa’s Fairfax Financial Holdings and other institutional investors.

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The company also said it would replace its chief executive Thorsten Heins with John Chen on an interim basis. Chen was as the former chairman and CEO of Sybase Inc. a database software company that SAP AG bought in 2010.

The move came after Fairfax Financial, which tentatively agreed in September to buy BlackBerry for $4.7 billion, has struggled to raise financing for the deal. Investors who were pinning hopes on a sale were terribly disappointed and wondered how the company would justify the move amid stiff competition from Apple and other Android vendors.

Investors would keep a close tab on the subscriber numbers, hoping that the company cut its subscriber losses. They would be eager to gauge the impact of company’s recent strategic choices and management transition on enterprise subscribers in the quarter.

The Street will focus on how BlackBerry plans to monetize its Blackberry Messenger (BBM) service, which was off to a strong start after being recently launched on rival platforms.

The enterprise segment is one of the bright spots in BlackBerry’s armory as its push email service generates high-margin amid falling device sales. Investors may look for BlackBerry’s strategy on email service as it continues to be the gold-standard when it comes to enterprise security and solidity of service.

In addition, BlackBerry could benefit from its large installed Blackberry Enterprise Services (BES) base with proven mobile device management software that now has cross-platform support. The Street would look for color on how BlackBerry’s new leadership would strengthen the enterprise business.

There are only minimal expectations on device sales. In the second quarter, BlackBerry sold only 3.7 million smartphones, exactly half of what it had sold during the same period last year. Most of them were based on the older BB7 platform, which led to stockpiling of BB10 handsets and caused BlackBerry to take a $934 million hit on writedown of unsold inventory last quarter.

Investors may focus on any comments over the strategy with respect to the patent portfolio and BB10 operating system. BlackBerry has, in the past, showed willingness to license out its BB10 platform to other vendors.

Further, inventory position would be watched closely. During the second quarter, approximately 5.9 million BlackBerry smartphones were sold through to end customers, which included shipments made prior to the second quarter.

Shares of BlackBerry are down 24 percent since its second quarter results and fell 47 percent this year. They traded between $5.44 and $18.32 during the past 52-weeks.