BlackBerry Stock: Is BBRY Stock Back on Top?

BlackBerryWhat’s Boosting BlackBerry Stock?

It’s been a while, but BlackBerry Ltd (NASDAQ:BBRY) now has cause for celebration. BlackBerry stock was up over 2.5% on Tuesday after reporting a stronger-than-expected third quarter.

BBRY stock posted adjusted earnings of $0.01 per share for Q3, which beat out the $0.02 per share loss expected by analysts.

But it was not all rosy for BlackBerry stock in the third quarter; the company posted a GAAP loss of $0.22 per share, which is a sight worse than the $0.07 per share loss projected by analysts. (Source: “Blackberry raised its outlook for the year and the stock is popping,” Business Insider, December 20, 2016.)

Revenue also came in lower than expected, earning $301.0 million versus the estimated $332.0 million. But, beyond some of the more muted results, it was ultimately a solid quarter for the hurting former tech behemoth, as reflected by the jump in BlackBerry stock.

The company upgraded its outlook for the year to the breakeven point, from a former projection of a $0.05 per share loss and a fourth-quarter upgrade also to the breakeven level from a $0.01 per share loss.

“We achieved significant milestones in Q3, delivering the highest gross margin in the company’s history for the second consecutive quarter and continuing to transform our infrastructure and operations to support an enterprise software business,” said BlackBerry CEO John Chen in a press release accompanying earnings. (Source: “BlackBerry Reports Record GAAP Gross Margin of 67%, Driven by Growth in Software and Services Revenue,” BlackBerry Ltd, December 20, 2016.)

“These accomplishments drove operating profitability in all business segments and overall positive non-GAAP EPS.” (Source: Ibid.)

This follows a recent announcement from the company that smartphone production would be halted in favor of focusing in on software development. On that topic, Chen said the following:

“The company plans to end all internal hardware development and will outsource that function to partners. This allows us to reduce capital requirements and enhance return on invested capital.” (Source: “BlackBerry Reports 89% Year Over Year Growth in GAAP Software and Services Revenue for Q2 Fiscal 2017; Company Announces New Strategic Direction for Mobility Solutions,” Marketwired, September 28, 2016.)

While the latest news marks a solid gain for BlackBerry stock, 2016 has hardly been kind to the company’s shares. BBRY stock has fallen about 14.5% since the beginning of 2016, but perhaps the pivot in the business model could help reinvigorate the stock in 2017.