Why Blackberry isn’t dead yet

June 24 00:39 2015

Blackberry (BBRY) is a company many people can’t believe isn’t dead yet. But there’s a big reason why: Cash flow. If you just look at the headlines, the fallen leader in mobile devices reported another dismal quarter. Blackberry reported a quarterly adjusted loss of 5 cents a share, which was a penny a share deeper than investors were braced for. Quarterly revenue came in 3% below expectations, too, at $658 million.BlackBerry Ties Up With Foxconn

Shares are down 3.7% to $8.86 Tuesday on the news – but not exactly in freefall. The reason is that investors who look past the accounting vagaries still see a company that’s cash flow positive. Make no mistake. Blackberry has a huge challenge to stay relevant in a world awash with iPhones, Android and Windows devices. Revenue is completely falling apart at the company as consumers and businesses alike gravitate to devices made by other mobile vendors. Long-term the risk of falling revenue cannot be overstated.

Here’s the number investors are really looking at. During the quarter, Blackberry generated cash from operations of $134 million. Even after you subtract the $11 million spent on capital expenditures, the company posted free cash flow during the quarter of $123 million. That’s a major improvement from the first calendar quarter of 2014 when the company posted negative cash flow of nearly $600 million.

And don’t think it’s just accounting mumbo-jumbo. Just follow the cash and investments of the company – which is rising – not falling. The company posted cash and investments of $3.3 billion – up 54% from a year ago. And yes, the company did add long-term debt in the fourth calendar quarter of 2014, but it’s been working that down.