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BlackBerry to show another drop in quarterly revenue -- analyst

Revenue likely bottomed out in its fiscal fourth quarter but the company could stage a revival based on more robust smartphone sales, according to a JP Morgan analyst.

BlackBerry CEO John Chen is still trying to turn the company around. Brian Bennett/CNET

BlackBerry will show another decline in revenue in its latest quarter, predicts JP Morgan analyst Rod Hall.

In an investors note released Thursday, Hall said he expects that BlackBerry finished its fiscal fourth quarter with sales of $791 million. Such a figure would be down 19 percent from the same quarter a year ago and down 0.2 percent from its third quarter.

BlackBerry's fourth quarter ended February 28 and included the holiday-shopping season.

BlackBerry Chief Financial Officer James Yersh said at the Consumer Electronics Show back in January that he expected revenue would hit a low point during the fiscal fourth quarter and then increase from there as a result of hardware sales, according to Hall.

The company has been struggling to stay afloat in the mobile phone market as more users continue to gravitate toward Apple iOS and Google Android smartphones. Though the company has been trying to expand its offerings in software and services, it still generates around 75 percent of its revenue from smartphone sales.

BlackBerry has been busy introducing new phones to try to win over customers. Last year, it unveiled four devices: the low-cost BlackBerry Z3, the Porsche edition BlackBerry, the extra-wide Passport and the traditional BlackBerry Classic. This year, the company will launch the BlackBerry Leap, a phone with a full touchscreen aimed at "young career builders." A new , a second Porsche edition BlackBerry and another keyboard-based smartphone are also on the agenda.

Hall expects BlackBerry smartphone shipments for its fiscal fourth quarter to touch 1.8 million units. If the analyst is on the money, that number would be a 10 percent drop from its third quarter but a 38 percent gain from its year-ago fourth quarter. Instead of pointing the finger at smartphone sales, Hall blamed the latest quarterly revenue shortfall on BlackBerry services.

"We expect BlackBerry to post yet another sequential decline in revenue in FQ4 as services revenue continues to fall," Hall said. "Looking ahead, we expect some growth in revenue as rising devices and software sales offset the continued fall in services revenue. However, while management has shown solid progress in reining in costs, revenue stability remains uncertain, in our opinion."

Still, Hall sees a silver lining in BlackBerry's future financial turnaround courtesy of those cost savings.

"BlackBerry is targeting sustainable profitability sometime" in the current fiscal year, Hall noted. "Given management's record of solid cost management, we believe this is achievable" by its fourth quarter.

The company is set to report earnings on Friday.