NEW YORK (TheStreet) -- Analysts expected paltry third-quarter earnings from BlackBerry (BBRY) on Friday but no one expected them quite so bad. A wider-than-expected loss indicated turnaround attempts from the beleaguered smartphone maker had yet to take root.
The Ontario-based business reported a net loss of 67 cents a share, deeper in the red than the loss of 43 cents a share analysts polled by Thomson Reuters had expected. Revenue of $1.2 billion was 56% lower than a year ago and missed consensus by $460 million.
Though earnings were off, details of a new deal with Foxconn inspired hope the company could turn itself around. BlackBerry announced it had entered into a five-year strategic partnership with the Taiwanese electronics manufacturer to develop devices for emerging markets, beginning with Indonesia in early 2014.
"Partnering with Foxconn allows BlackBerry to focus on what we do best -- iconic design, world-class security, software development and enterprise mobility management -- while simultaneously addressing fast-growing markets leveraging Foxconn's scale and efficiency that will allow us to compete more effectively," said CEO John Chen in a statement.
By mid-morning, shares had rallied 3.2% to $6.45. Year to date, the stock has dropped 47.6%.
TheStreet Ratings team rates BLACKBERRY LTD as a Sell with a ratings score of D. The team has this to say about their recommendation:
"We rate BLACKBERRY LTD (BBRY) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BLACKBERRY LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, BLACKBERRY LTD swung to a loss, reporting -$1.20 versus $2.24 in the prior year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Communications Equipment industry. The net income has significantly decreased by 310.6% when compared to the same quarter one year ago, falling from -$235 million to -$965 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Communications Equipment industry and the overall market, BLACKBERRY LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$144.00 million or 133.96% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 55.60%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 318.18% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: BBRY Ratings Report