BlackBerry (BBRY) Stock Plunges After Q1 Sales Disappoint

Shares of BlackBerry Limited BBRY fell 11% in morning trading after the release of its earnings report for the first quarter of fiscal year 2018, which saw sales come in well below analysts' expectations.

BlackBerry reported revenues of $244 million, which missed the Zacks consensus estimate of $264 million.

Since last year, BlackBerry has shifted from producing smart phones to setting its focus as a software company that licenses old hardware patents. Handheld devices revenue, which is made from licensing agreements for the company's phone brand, was $37 million compared to $152 million last year when the company still produced phones.

Enterprise software and services revenue, which analysts have been following closely, fell from $106 million last year to $101 million. BlackBerry also received 3,000 orders from enterprise customers in the first quarter, down from 3,500 orders in the fourth quarter of fiscal 2017.

However, profit did come in above expectations. BlackBerry reported breakeven earnings (on an adjusted basis) in the first quarter, which exceeded the Zacks consensus estimate of a loss of 2 cents per share.

"In Q1, we made great progress strengthening our strategic position in emerging markets, most notably in cybersecurity and the Enterprise of Things," CEO John Chen said in a statement. "Our financial foundation is solid."

Before this report, BlackBerry stock had been doing well this year. At Thursday's close, shares of Blackberry had gained 60% this year. And earlier this month, BlackBerry stock rose after an analyst note from Citron Research said the company will play a larger role in autonomous cars and the Internet of Things, and that BlackBerry could also be a perfect takeover target.

BBRY remains a Zacks Rank #3 (Hold). Our consensus estimates show that there will be positive year-over-year growth by 2019. The company expects to make a profit on an adjusted basis and to generate positive free cash flow in fiscal 2018.

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