Why BlackBerry Ltd (NYSE: BB) stock is under pressure

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BlackBerry Ltd (NYSE: BB) stock lost over 13.4% on 1st April, 2020 (as of 10:57 am GMT-4; Source: Google finance) after the firm reported quarterly sales below the analysts’ expectations in the fourth quarter of FY 20. The company has reported the loss of $41 million, in the fourth quarter, versus a profit of $51 million, in the year-ago period. The company achieved positive year-over-year Software and Services billing growth in the fourth quarter. BB also has healthy sequential billing performance from enterprise software and services. Gross margin was 77%, operating income was $51 million, and operating margin was 18%. The company has generated free cash flow of $32 million. Total cash, cash equivalents and investments were $990 million at the end of February, 2020, which increased by $20 million from November 30, 2019. The company’s net cash position was $385 million at the end of the quarter. The company has generated cash from operations of $35 million and capital expenditures of $3 million.

BlackBerry Ltd, NASDAQ:BBRY

Moreover, the IoT business under performed in the fourth quarter, mainly due to BTS. BTS was unexpectedly affected by the slowdown of the auto industry supply chain due to the COVID-19. The company now expects this trend to continue for the near future due to a temporary global auto production shutdowns and related slowdowns of auto sales. On a positive note, BlackBerry QNX continued to gain design wins. The company has chosen for 31 design wins in the quarter. 16, 1-6, were in the automotive market and 15 were in the general embedded market. Within the general embedded market, the company saw increased demand in the industrial and medical verticals, including being chosen by Wabtec Corporation, which is a global leader in transportation solutions who merged with GE Transportation last year.

BB in the fourth quarter of FY 20 has reported the adjusted earnings per share of 9 cents, beating the analysts’ estimates for the adjusted earnings per share of 5 cents, according to analysts polled by FactSet. The company had reported the adjusted revenue growth of 11 percent to $282 million in the fourth quarter of FY 20, missing the analysts’ estimates for revenue of $399 million.

Meanwhile, the company expects a tough first quarter due to the COVID-19 impact on the business. This is expected to linger into even in the second quarter, but the company do project a stronger second half of fiscal year versus the first half of the fiscal year.

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