Tech stock under pressure: BlackBerry Ltd (NYSE: BB)

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BlackBerry Ltd (NYSE: BB) stock fell over 3.6% on 25th June, 2020 (as of 10:49 am GMT-4 ; Source: Google finance) after the company posted mixed results for the first quarter of FY 21 as demand for its QNX software used in cars got affected by the COVID-19 pandemic that severely bruised the auto industry. Net loss grew to $636 million from $35 million, including the impairment charge of $594 million related to its Spark reporting unit. Coronavirus-related job losses and shuttered dealerships during lockdowns led to a significant fall in demand for cars. Light vehicle sales in the United States, among BlackBerry’s biggest markets, declined by almost 27% in March from a month earlier. However, the company has started seeing signs of recovery in the auto sector, which is evidenced by the reopening of the production facilities. The company would not give financial projections for the current year, due to the uncertainty about the business impact of the coronavirus pandemic.

BlackBerry Ltd, NASDAQ:BBRY

BB in the first quarter of FY 21 has reported the adjusted earnings per share of 2 cents, beating the analysts’ estimates for the adjusted loss per share of 2 cents. The company had reported 16.6 percent fall in the adjusted revenue to $206 million in the first quarter of FY 21, missing the analysts’ estimates for revenue of $214.1 million, according IBES data from Refinitiv. The company’s recurring non-GAAP software product revenue was more than 90% for the first quarter. The company has delivered the Non-GAAP gross margin of 71% compared to 75% last year.  The company has reported Non-GAAP operating earnings of $3 million for the first quarter of FY 21 compared to non-GAAP operating earnings of $5 million last year.  The company has posted a surprise profit as it put a tight control on costs by reducing the marketing and related costs by $31 million in the first quarter. Adjusted operating expense decreased 22.7% to $150 million. The quarter also benefited from solid demand for BlackBerry’s enterprise security software as companies spent more on bolstering IT security to protect data of employees now working remotely.

Meanwhile, the Company is making significant investments to support BlackBerry Cylance solutions and is committed to hiring and retaining top data scientists and engineers in the areas of artificial intelligence and machine learning. R&D investments at BlackBerry QNX are increasingly focused on software innovations for autonomous and connected vehicles. The Company puts a major portion of its R&D investments to the development of software products and services for the BlackBerry Spark platform and BlackBerry IoT solutions that meet the needs of both enterprise IT departments and end user.

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