BlackBerry surges on software sales
TECH Stock up 13% on rosier outlook
TORON TO • BlackBerry Ltd.’ s stock surged Thursday after the company posted record revenue in its software business.
The Waterloo, Ont.- based smartphone- turned- software company beat analysts’ expectations that it would break even, posting a profit of $26 million or 5 cents per share excluding some items for the second quarter.
Revenue for software and services for the three months ended Aug. 31 hit US$ 196 million on the strength of growth in its enterprise software and important deals in its automotive business, including a partnership with Delphi Automotive to build a software operating system for self-driving cars.
The stock was up more than 14 per cent after midday on the Toronto Stock Exchange and closed at $13, up 12.75 per cent on the day. The success comes a year after BlackBerry gave up on the handset business that catapulted the company to one of the world’s most recognizable brands. It turned to other lines of business on which it could bank its reputation for high security.
Now, CEO John Chen said his company is winning again. In a call with analysts, he pointed to contracts with the U. S. government — BlackBerry had 23 transactions of more than US$ 100,000, seven larger than US$ 500,000 and five of more than US$ 1 million with federal agencies in the last quarter — and a few awards and accolades for its security acumen as signs of success in the enterprise software realm, its biggest cash driver.
Bl a c k Ber r y also announced i ts first “BlackBerry Secure” licensing deal with NTD, a Yangzhou- and Beijing- based manufacturer of smartphones and Internet of Things devices. It will embed BlackBerry’s security software into its devices for a fee, a business model that Chen expects to drive growth for the second half of the year. He sees opportunities in securing not only smartphones, but laptops, IoT devices and sensors, to start.
“I don’t see a limit to my ability to license software technology,” Chen said in a call with media.
The company also has an appetite for mergers and acquisitions, Chen said. While he didn’t reveal specific plans for the US$ 1.9- billion stockpile of cash, much of it an award from a dispute with Qualcomm, he said the company is looking at buy- ing players in cyber- security, automotive and enterprise management.
“We’re going to make acquisitions. We’re very patient. We don’t want to be over-paying,” he told media.
When it comes to automotive technology, Chen doesn’t expect self- driving cars to hit the roads as early as others in the industry.
“Everyone says 2021, I don’t belv ieve it,” but he is setting up the company to compete in that world.
“We have to win that for the future, but today there’s a lot of opportunity on the connected ones,” Chen said.
To that end, he noted there are about 60 million cars built annually t hat include some sort of intelligent software, such as the technology provided by the QNX unit.
BlackBerry also upgraded its outlook for the year, stating it expects software revenue to grow by 10 per cent to 15 per cent this fiscal year, which ends in February.
Revenue fell to US$ 249 million from US$ 352 million a year earlier but rose slightly from US$ 244 million in the prior quarter. Net income for the quarter was US$ 19 million, or 4 cents per share.
Excluding r estructuring costs and other items, BlackBerry said it expected fiscal-year r e v e nue of US$ 920 million to US$ 950 million and positive earnings per share. It also forecast positive free cash flow.