BERRY GOOD
BLACKBERRY’S MOVE OUT OF HANDSETS AND INTO SOFTWARE CONTINUES TO PAY OFF.
When John Chen took over as BlackBerry Ltd.’ s chief executive four years ago, he warned it would be a long haul to turn around the 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 at the time
He was hired to help the Waterloo, Ont. company reverse its fortunes after competition f rom 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 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 on strength from its QNX in- car operating systems, a US$ 815- million payment from Qualcomm over royalty payments and bullish analyst reports on its auto and trucking software.
BlackBerry’s stock soared again Wednesday, rising 11.6 per cent after it posted software and services revenue of $ 190 million for its 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 beat analysts’ expectations of about $216 million.
Revenue 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 as early as next quarter, CFO Steve Capelli said on a conference call, citing an expected range of zero to $3 million.
Still, executives and investors celebrated the growing software business.
“They’re on a good path, and they’re consistently moving in the right direction,” said Nicholas McQuire at CCS Insight.
New partnerships with chip maker Qualcomm and Denso Corp., a leading manufacturer of auto parts with close ties to Toyota, are also part of BlackBerry’s push into developing new technology for vehicles. Chen also noted a deal with Pana Pacific, a major heavy truck dealer in the U. S., for its BlackBerry Radar technology that helps manage trucking fleets.