BlackBerry shares fall despite Q1 profit; revenue lower than analysts expected

WATERLOO, Ont. - BlackBerry (TSX:BB) is reporting a US$671 million profit for the first quarter but its revenue was lower than expected, missing analyst estimates. The company says its revenue for the quarter was US$235 million - compared with estimates of US$264.39 million, according to Thomson Reuters data.

The negative surprise in sales seemed to have more impact with stock traders than the profit, with BlackBerry shares falling in extended trading shortly after the announcement.

BlackBerry shares (Nasdaq:BBRY) were down roughly six per cent at about 7 a.m. ET. They traded at US$10.38, compared with the previous close on Nasdaq at US$11.06.

The company’s shares had risen since the beginning of the month amid speculation that BlackBerry could be a takeover target and its stock could rise substantially in future. BlackBerry’s shares rose about 50 per cent from roughly $10 in April to a 52-week high of $15.82 on June 1 at the Toronto Stock Exchange.

The increase came as Citron Research published a report saying BlackBerry is a likely buyout target at a sizable premium, now that its transition from hardware maker to software company is nearly complete. Citron also projected BlackBerry’s shares were likely to reach US$20 on the Nasdaq within 24 months, echoing a Macquarie Research analyst’s report from mid-May that said the company’s shares could jump to US$45 by 2020. BlackBerry’s 52-week high on Nasdaq is US$11.74.

The company once famous for its smartphones said in September that it would exit the hardware business to focus on growing its software business, which includes highly secure communications and products for the automotive industry.