Someone Else Is Eating BlackBerry's Lunch -- Again
Investors continue to bludgeon BlackBerry (NYSE: BB), with shares down double-digits again after the company released fiscal 2020 second-quarter results. The old smartphone pioneer has had a new lease on life under CEO John Chen as it has forged ahead with enterprise software and security services aimed at connected devices and the auto sector. Though software still looks like the unquestionable best path forward, it too is showing some signs of weakness. The power of digital-based systems was not exactly a secret, and BlackBerry has ample competition eating into its growth narrative.
BlackBerry reported adjusted revenue of $261 million, up 22% year-over-year but missing average Wall Street analyst expectations for $266 million. Unadjusted revenue grew 16% to $244 million. Though free cash flow (revenue minus cash operating expenses and capital expenditures) came in at $14 million, it was the lowered outlook for the full fiscal year that seems to have spooked investors. Full-year revenue growth is now expected to be 23% to 25%, compared with 23% to 27% before.
Ok, so a slight downgrade, but north of 20% growth is hardly bad. However, even here some context is needed. Those higher numbers are being fueled by BlackBerry's acquisition of endpoint security firm Cylance back in February 2019 (the Q1 2020 fiscal period) for total consideration of $1.4 billion. Cylance has been growing, but the rest of BlackBerry has not; and even Cylance is showing signs of slowing, making the 10-figure price tag look quite steep.
Source Fool.com
