BlackBerry Limited (BBRY): Shut the Hardware Business Down - Wells Fargo

Wells Fargo analyst, Maynard Um, calls for Blackberry (NASDAQ: BBRY) to shut the hardware business due to the margin accretion. He examines a number of options for the hardware business but believes shutting it down would be most value creating long-term. If the company were to shut its hardware business down, he estimates F17E revenue would decline to around $1.07B from the current $1.91B but estimate gross margin would increase to 79.5% from 50.5% and operating margin to 17% versus our current -0.8% forecast. All else equal, this would equate to F17E EPS of $0.27 versus the current -$0.10 forecast. This would reduce balance sheet risk and volatility as well.

No change to Market Perform rating or $7.25-$8.00 valuation range.

For an analyst ratings summary and ratings history on BlackBerry click here. For more ratings news on BlackBerry click here.

Shares of BlackBerry closed at $7.00 yesterday.

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