BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) is set to report Q2 2016 earnings on Friday morning before markets open. Analysts are calling for revenue of just over US$600 million and a loss of US$0.09 per share.

Generally though, the consensus is fairly pessimistic. Below are three reasons why.

1. Hardware sales

It’s safe to say that BlackBerry has lost all momentum in its hardware business, and its brand is badly damaged. Many observers believe the company should stop selling handsets altogether. But as long as BlackBerry is still selling phones, analysts will be looking closely at how many units the company shipped in the quarter.

The prognosis does not look good. Canaccord Genuity analyst Mike Walkley is guiding for 975,000 units, and is particularly pessimistic about the Passport and the legacy BB10 phones. As he put it in an interview with CNBC, “We’ve talked to several store managers…and [BlackBerry’s] phones are not selling well.”

If you need any more hints, reports indicate BlackBerry is planning to release an Android-powered phone in November. If the company’s current handsets were gaining any traction, do you really think an Android device would be in the works?

2. Software revenue

BlackBerry actually reported strong software-related revenue last quarter, mainly on the back of big growth in licensing revenue. Analysts will be hoping for more of the same this quarter.

But once again, there is reason for pessimism. The Enterprise Mobility Management (EMM) industry has become extremely competitive over the past couple of years, with many tech giants joining the fray. Companies like Airwatch and Microsoft are offering bundled enterprise software solutions, and this is driving down prices.

So, unless BlackBerry announces more licensing deals, there will likely be more bad news.

3. The Good Technology acquisition

At the beginning of September, BlackBerry made its largest acquisition in the company’s history, buying Good Technology for over US$400 million. The move expanded BlackBerry’s capabilities in the EMM space.

But it has also come with some problems. Good Technology was unprofitable prior to being acquired, and offered some services that overlap with BlackBerry’s. And Mr. Walkley is skeptical BlackBerry can find enough synergies to offset these losses.

CEO John Chen should provide more details about BlackBerry’s plans with Good Technology, and his comments will be heavily scrutinized. There is easily the potential for some bad news.

Here at The Motley Fool, we always advocate long-term investing, and that means looking past the noise from quarterly earnings releases. But if you’re a BlackBerry shareholder, you may want to brace yourself. And if you’re not, you may want to wait a day before buying the stock.

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Fool contributor Benjamin Sinclair has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft.