BlackBerry (BBRY) is reporting quarterly earnings results on December 20, before the market opens. Expectations are low this broken company will meet consensus estimates. The only true risk factor in Blackberry’s business is its headset unit. Its software units are far from any trouble.
Software sales drive hope
Blackberry is pivoting its business towards software. In enterprise, device management sales are picking up. BlackBerry Enterprise Services (“BES 12”) offers security for enterprises managing mobile smartphones and tablets. QNX gives the company a play in the IoT market and the automobile market. Competition in IoT is fierce, so investors should not expect high profit margins in this segment.
Hardware divestiture
BlackBerry is removing the operating cost line item from its business. By handing over the manufacture and distribution of Android BlackBerry to TCL, BlackBerry will focus its efforts and work on the software. The more units TCL sells, the more IP revenue and software sales it earns.
On the earnings call, the company may give estimates on HUB+, BB Keyboard, Radar, and smartphone royalty revenue estimates.
Who is TCL?
TCL is effectively behind the Alcatel smartphone branded smartphone. BlackBerry’s DTEK50 and DTEK60 both share the Alcatel/Idol phone design, but differ by the software implementation of Android. It is still early, but early signs suggest the DTEK50 and DTEK60 is a technically good phone. It, along with the rumored DTEK70, could even gain market share. It just needs TCL to take it there through a higher marketing spend and a sales team to back these phones.
