Why BlackBerry Ltd (NASDAQ: BBRY) stock is crashing

BlackBerry Ltd (NASDAQ: BBRY) has posted weak first quarter earnings results amid a sharp revenue downturn, and has left its outlook unchanged. As a result, the stock crashed over

BBRY has reported a profit of $671 million, for the first quarter ended May 31st, compared with a loss of $670 million, a year earlier. The company has posted the quarterly profit due to a $940 million arbitration payment from U.S. chipmaker Qualcomm Inc. Moreover, the company said that it has got more than 3,000 orders from enterprise customers in the quarter, down from over 3,500 orders it got in the fourth quarter. There were no purchase orders with contract manufacturers at the end of the first quarter. BBRY has focused on its software portfolio with a number of recent acquisitions and is betting on its offerings for the healthcare and automotive industries to fuel growth.

BlackBerry in the first quarter of FY 18 has reported the adjusted earnings per share of $0.02, beating the analysts’ estimates for the adjusted earnings per share of 0 cents or break even. The company’s adjusted revenue fell 42.5 percent to $244 million in the first quarter of FY 18, missing the analysts’ estimates for revenue of $262.8 million. BlackBerry has Q1 non-GAAP gross margin of 67%.

Additionally, the total cash, cash equivalents, short-term and long-term investments has increased by $855 million to approximately $2.6 billion as of May 31st, 2017. This reflects free cash flow of $860 million, which includes cash flow from operations of $863 million.

For FY 18, BlackBerry expects the growth at or above the overall market in software and services. The company also expect to be profitable on a non-GAAP basis and to generate positive free cash flow for the full year, excluding the benefit of the Qualcomm arbitration award.

Meanwhile, BlackBerry has received acceptance from the Toronto Stock Exchange with respect to a normal course issuer bid (NCIB) to purchase for cancellation up to 31,000,000 BlackBerry common shares, representing approximately 6.4% of the outstanding public float as at May 31st, 2017. As of May 31st, 2017, BBRY had 531,475,629 common shares outstanding and the public float was 481,212,321 common shares. BBRY has entered into an automatic repurchase plan dated as of June 22nd, 2017 with TD Securities Inc. to allow for the repurchase of common shares at times when BBRY ordinarily would not be active in the market due to its own internal trading blackout periods, insider trading rules or otherwise.

BBRY stock has risen 57.77% in the last one year (source: Google Finance).