Better than expected financial results boost Blackberry shares

(December 21) The Canadian-based technology company BlackBerry Ltd shares had one of their best days in months following better than expected financial results.

BlackBerry shares rise

On Wednesday, BlackBerry shares spiked 11.6 percent or $1.62 to close at $15.59

The company announced an unexpected net profit and also revenue above the estimate of analysts.

John Chen, executive chairman, claimed that the company was making good progress towards being a key software supplier for autonomous vehicles an area that he sees as a key growth opportunity for the company.

The company once was known primarily for its smartphones which were very secure. The company is named after the BlackBerry phones. Originally the company with headquarters in Waterloo Ontario was known as Research in Motion (RIM).

Blackberry is changing its product mix

The company is trying to reposition itself as a cybersecurity, software, and intellectual property supplier. It is working with many automotive industry's major chip makers and parts suppliers.

Blackberry phones are now manufactured, designed and marketed by TCL Communication (Blackberry Mobile) for the global market. BB Merah Putin serves the Indonesian market and Optiemus the Indian market.

The announcement that the company was no longer to produce its own BlackBerry phones was discussed in a September Digital Journal article.

BlackBerry famous for its mobile phones

BlackBerry was formerly a key player in the smartphone market. It was well known for its security features. At its peak in September of 2013, BlackBerry had 85 million subscribers globally. However, BlackBerry was unable to keep pace with Android and Apple phones.

By March 2016 subscriptions fell to 23 million. In the fourth quarter of 2016 only 207,900 BlackBerry phones were sold..

The financial results

BlackBerry has been experiencing financial difficulties for some time now. In the most recent quarter it lost $275 million. This includes a payout of $149 million after it lost an arbitration with Nokia.

On a positive note, excluding the Nokia payout and other items the company had a profit of $16 million or three cents a share. This result was better than analysts had predicted. They thought that the adjusted earnings would break even.

Revenue was higher than predicted as well on the quarter at $226 compared to an expected $214.6 million.

Revenue from handheld devices continued to decline as the company change its emphasis. The revenue from this source dropped to just $9 million from $62 million. Revenue from system access fees also dropped to $27 million from $67 million.

However, the revenue from software, services, and licensing rose to $190 million a record and up from $160 million last year.

New developments at BlackBerry

CEO Chen said about the company's work with many auto chip manufacturers and parts suppliers: "They have engaged us to provide them a BlackBerry operating system for the car that is high on safety and security." He noted that a modern car has more lines of code than an airplane.

BlackBerry has developed about 12 different software modules beyond infotainment systems.

As an example, the company has modules that guide lane changes with advanced driver assistance. It also has modules that connect the vehicle to wireless networks. It also shows how the various systems are functioning through virtual cockpit displays.

Over time, the company's revenues should increase. Chen said: "Some of the design wins we had last year will turn into revenue in 2019 and the wins that we are having right now are going to turn into (revenue) in 2020.".

Just last week, he company has announced a partnership with Denso Corp a Japanese-based company that is one of Toyota's technology suppliers. The two will develop an integrated platform for co-ordinating human-machine interfaces.

The company now has 1,200 software sales people out in the field and a number of government agencies are renewing contracts for their software assuring the company of a revenue stream.

CEO John Chen said: “We really do have a lot of people that want to do business with us,"

Previously published in Digital Journal

Blackberry laying off workers in Ontario and Florida

Blackberry is laying off an unspecified but "small number" of employees both in Waterloo, Ontario, and at Sunrise Florida. The creator of the Blackberry Messenger, Gary Klassen, has left the company, according to reports.

The Florida newspaper SunSentinel reports Blackberry notified the state that it would be laying off 75 employees between February 5 and February 26. However Blackberry refused to confirm these numbers to the CBC after phone and email requests. A statement from Blackberry reads:

"As BlackBerry continues to execute its turnaround plan, we remain focused on driving efficiencies across our global workforce. This means finding new ways to enable us to capitalize on growth opportunities, while driving toward sustainable profitability across all parts of our business. As a result, a small number of employees have been impacted in Waterloo and Sunrise, FL. It also means that BlackBerry is actively recruiting in those areas of our business that will drive growth. For those employees that have recently left the company, we know that they have worked hard on behalf of our company and we are grateful for their commitment and contributions."The cuts are part of CEO John Chen's plan to improve the company's performance. Blackberry denied rumours that about 35 percent of its work force would be cut.

Blackberry would not confirm that Klassen was among those cut from the Waterloo Ontario facility. However, his wife Jenn posted a photo of her and her husband on her Facebook acoount that read: "My husband has walked out of BlackBerry for the last time!" Klassen was director of architecture and innovation. Another senior executive, QNX boss, Dan Dodge also recently left the company.

Richard Tse, an analyst for Cormark Security, said: “The reality is they are really trying to make a pivot to a software business, so everything they are doing is laser-focused on that. There may be people from the legacy business who are not attuned to that.” Given the modest size of the layoffs Tse did not think that Blackberry was giving up on the handset business as yet. Chen has been making a number of acquisitions that have expanded its ability to offer software for mobile devices. In the third quarter of last year, Blackberry sold just 700,000 handsets compared to selling more than 12 million at its peak of production. Chen said: “My first goal is to get devices to break even. I have been very vocal: If I cannot get there, I will not keep taking my investors through that.” In the past Blackberry employed almost 11,000 people in the Waterloo area but in 2014 there were about 2,700.

Research in Motion stock motion is down

   Research in Motion (RIM) the Canada-based company that makes the Blackberry has been selling off its Playbook tablet at huge markdowns from its original price. I saw it on sale at Futureshop the other day advertised at 200 dollars marked down from 500. Of course they had none in stock!
   RIM had introduced the Playbook in April at a time when iPad had already established a clear dominance of the market. In the third quarter of this year RIM sold 150,000 Playbooks compared to 11million iPads sold by Apple.
   RIM shares dropped more than 8 per cent the other day. Once a favorite with investors, this year the price of the stock has dropped about 70 per cent. The company warned it would not meet its financial targets. RIM market share has been eaten up by the Apple iPhone and also Google's Android devices. A global outage of  its network for the Blackberry also hurt consumer confidence in the company.
For much more detail see this article.