Blackberry CEO says turnaround `is taking longer than I expected'
Blackberry Ltd. fell as much as 7.3 per cent after three analysts downgraded the stock, but chief executive officer John Chen urged patience and said he's boosting the sales force to improve growth.
The Waterloo, Ont.-based software firm posted US$174 million in revenue for the fiscal first quarter ended May 31, down 16 per cent from the same period last year. Analysts had expected sales of US$178 million.
“We're hiring a lot of people, especially in the sales force. We've had some luck recently, and so we expect to see good things,” Chen said in an interview on BNN Bloomberg Television. The company expects to have 23 per cent more salespeople in August than it employed in March, he said.
When asked about the company's turnaround, Chen said: “This is taking longer than I expected, for sure. But certainly I can see the progress, so we'll be patient.”
Blackberry, which soared to prominence as the maker of some of the earliest smartphones, is now focused on cybersecurity and internet-of-things software, serving the auto industry and other sectors.
Analysts cited slow growth in the software and services segment and the effects of the global chip shortage, which is hurting auto production, in making the downgrades. Blackberry's QNX software for vehicles is installed in about 195 million vehicles, according to the company.
The shares fell 4.42 per cent to US$12.12 on the day in New York.
CIBC World Markets analyst Todd Coupland said revenue for software and services is expected to be at the low end “or even below” previous guidance of US$675 million to US$715 million for the current fiscal year. The bank downgraded the stock to underperformer, based partly on valuation.
The shares have risen nearly 80 per cent this year after catching on with retail traders on Reddit and other platforms. “We recommend waiting for a more attractive entry point,” Coupland wrote to clients.
Analysts from TD Securities and Canaccord Genuity also downgraded Blackberry to sell-equivalent on Friday. However, the company's ongoing negotiations to sell its patent portfolio could provide a capital boost, Canaccord analyst Michael Walkley wrote.
At Wednesday's annual meeting, Chen emphasized the company's growth outlook despite its recent challenges. “We're going to be focusing now more on growth, given the fact that we have two very big markets we talked about earlier, cybersecurity and IOT,” said Chen. “The idea is once the growth comes in, it will kick into profit. So I think in the short term, we will spend a little bit more money, maybe at the expense of some of the profitability.”