SWITCHING FOCUS
After bolstering its software revenue, BlackBerry is ready to get message out,
BlackBerry Ltd. aims to expand and modernize its distribution network to better reflect its identity as cyber security-based software vendor rather than a maker of smartphone hardware, chief executive John Chen told the company’s annual meeting of shareholders on Wednesday.
As it evolves from a more traditional business model focused on selling handsets to consumers via telecom partners, Chen said its marketing approach needs to adapt as well. “Obviously, the audience has changed,” he said, adding that BlackBerry must overcome a distribution “weakness.”
He said while the focus has been on solidifying the balance sheet and bolstering software revenue amid a sustained drop in handset sales, the time has come to stress engagement with market players including software developers, equity analysts and customers.
Chen said the company has made headway in building out a secure and reliable end-to-end digital ecosystem and the progress is evident in a strong stock performance for most of the year. Now, more road show sum- mits with analysts and other marketing efforts are in the works “to get the message out.”
He delivered his remarks to shareholders at the company’s headquarters in Waterloo, Ont., before BlackBerry’s fiscal 2018 first-quarter earnings report to be announced Friday. Analysts expect the company to report lower revenue on tumbling hardware sales and access fees offset partially by higher enterprise mobility software sales.
Credit Suisse analyst Kulbinder Garcha in a note to investors said he expects BlackBerry to report a 12.8per-cent quarter-over-quarter revenue drop to at $259.1 million (U.S.) and adjusted earnings per share of $0.01for the quarter. Consensus estimates are for $264.5 million in revenue and zero EPS.
Garcha expects software revenues to grow 15 per cent in fiscal 2018 and 2019 as service access fees fall to nil.
He said software revenue could reach $900 million by 2019 but cautioned that BlackBerry as currently structured will not be profitable “unless software scales or the company cuts operating costs.”
BlackBerry is also expected to provide an update during the earnings report on the installed base for its fleet management software called Radar that lets transport companies relay information about the location and contents of their trucks.