The decline was "surprising," said Morningstar Research analyst Ali Mogharabi. "You don't expect it from a company that's still in an early-stage of enterprise software growth," Mogharabi said. Investors had high expectations going into BlackBerry's Friday report. The stock had gained about 60 percent since its last quarterly results in March on hopes sales were poised to take off under a turnaround effort focused on selling industrial software to businesses.
The company reported revenue on adjusted basis of $244 million for the quarter ending May 31, missing analysts' estimates of $264.5 million, according to Thomson Reuters I/B/E/S. Profit in the same period totaled $671 million, or $1.23 per share, compared with a loss of $670 million, or $1.28 per share, a year earlier.
The quarter included a $940 million arbitration payment from US chipmaker Qualcomm Inc. "This is a big disappointment for the stock and likely to cast a pall on the sustainability of the turnaround," said Tim Ghriskey, chief investment officer with Solaris Asset Management who helps manage $1.5 billion. His firm does not hold the stock. Excluding items, the company earned 2 cents per share. Analysts on average had expected the company to break even.