BlackBerry surges again as investors back software shift
When John Chen took over as BlackBerry Ltd.’s chief executive officer four years ago, he warned it would be a long haul to turn around the struggling smartphone maker.
“BlackBerry is an iconic brand with enormous potential — but it’s going to take time, discipline and tough decisions to reclaim our success,” Chen said in the November 2013 statement that announced his leadership.
He was hired to help the Waterloo, Ont., company reverse its fortunes after competition from Apple and Samsung decimated its handset market share.
Four years later, investors seem pleased with Chen’s strategy to ditch the smartphone business and focus on software and services including enterprise device management and connected cars.
BlackBerry’s stock has soared more than 128 per cent on the Toronto Stock Exchange since Chen’s start date, closing Wednesday at $15.59, much higher than the $6.75 on Nov. 4, 2013.
It’s a far cry from BlackBerry’s heyday when it traded at $134, but its stock is up 65 per cent this year alone.
The surge started this spring on strength from its QNX in-car operating systems, a US$815-million payment from a dispute with Qualcomm over royalty payments and bullish analyst reports on its automotive and trucking software.
BlackBerry’s stock soared again Wednesday, rising about 11 per cent on the TSX after it reported software and services revenue of $190 million for its fiscal third quarter, breaking the record set in the previous quarter.
“Our strategy is working and our execution is yielding results,” Chen said in a statement. “We are a market leader in secure endpoint management and embedded software. The validation we have received, from partners, customers and industry experts around the world, speaks for itself.”
While overall revenue fell to $226 million in the three months ended Nov. 30, down 21.8 per cent from $289 million in the same period last year, it still beat analysts’ expectations of about $216 million.
Revenue cobbled together from the new business lines remains a fraction of the former handset revenue, which stood at approximately $480 million when Chen started four years ago. Handset revenue fell to $9 million this quarter and could disappear altogether as early as next quarter, CFO Steve Capelli said on a conference call with analysts, citing an expected range of zero to $3 million.
BlackBerry reported a loss of $275 million this quarter, more than double the loss of $117 million in this period last year. But adjusted net income hit $16 million when excluding amortization, restructuring and debenture charges. Adjusted earnings per share was $0.03.