Although BlackBerry appears to have succeeded at getting out of the smartphone handsets that hung like an albatross about its neck, the Canadian outfit has a long way to go before it can convince the world its software business is a goer.
The company, which will report fourth-quarter and full-year results on Friday, says it has no major gaps in its software portfolio, thanks to the integration of a string of recent acquisitions.
However, it admits that more work is needed to get those offerings into the healthcare and automotive industries and other sectors that it hopes will power future growth.
While analysts see Blackberry as something different from what it was ten years ago, it has not really convinced businesses that it has products they might want.
Chief Executive Officer John Chen would need a late bump in sales to hit the 30 percent growth in software revenue BlackBerry targeted for its recently completed fiscal year.
BlackBerry’s enterprise-value-to-forward-revenue ratio is 3.14 lower than the roughly 4.5 ratio which Oracle and Microsoft have. In fact, Blackberry is expected to barely break even in the fourth quarter and likely notch revenue of less than $1.4 billion. In the good old days, Blackberry was taking more than $5.5 billion a quarter.
The redesigned company has gone from selling its own phones with the servers and software that manage them for businesses and governments to securing an array of rival devices and the information that flows to and from them.
The company’s 2015 purchases of Good Technology and WatchDox helped it secure a leading position in the enterprise mobility market, and its QNX industrial operating system is key to its self-driving vehicle ambitions. However, there is tough competition in these and other areas of interest.
Chen, who took over the helm of BlackBerry in late 2013, said in December the company would take another four or five quarters to halt the steady decline in its overall revenue, with software sales growth projected to slow to around 15 percent in the fiscal year that began in March.
Blackberry head of corporate development and strategy,Jim Mackey has quietly cleaned out his desk and snuck out of the building without anyone noticing.
Mackey left the company in the middle of February and it appears that no-one has thought to alert the media. The move does dump Blackberry in it somewhat as it lacks leadership as it tried to move from smartphone hardware to software.
Mackey, who was executive vice president, executive operations, made his own announcement on social notworking site Linkedin. He did not give a reason and became unavailable for comment.
Blackberry, which in late 2013 issued a press release on the hiring of Mackey, did not announce his exit. Chief Operating Officer Marty Beard refused to answer any questions either.
Mackey worked directly with Blackberry Chief Executive John Chen, navigating the purchase and integration of a string of acquisitions and the signing of major partnership agreements.
Beard said in the interview that the company had largely completed its software portfolio and needed to push hard to win more customers, including by adding partners.
“The biggest issue we have is not getting invited to the table because the customer doesn’t know that BlackBerry is doing that. That’s the challenge.”
Troubled phone maker Blackberry is facing a class-action lawsuit from more than 300 former employees.
The outfit is accused of denying employees their termination entitlements by transferring them to a partner company and, once they had accepted employment there, firing them. The former employees were then allegedly given their final date of work.
“Blackberry’s actions amount to a termination of the employees’ employment. This entitles these employees to statutory, common law, and/or contractual entitlements on termination.”
Blackberry hasn’t commented on the case yet, though the suit said that it has refused to pay those entitlements and the transferred employees have lost their accumulated years of service.
In 2016, Blackberry also laid off around 200 employees from Waterloo and Florida, which followed an announcement in 2012 to cut over 5,000 jobs over the a multi-year period.
Blackberry is going down the toilet lately. No one is buying its phones and its current business plan is to flog its software and general patent trollage.
Blackerry said that it has reviewed the allegations in the lawsuit, and was confident it complied with all its obligations to its employees. It said the case “lacks merit”, and it will defend it “vigorously”.
Troubled smartphone maker BlackBerry is doing better thanks to its shift to its higher-margin software business.
The outfit reported better-than-expected adjusted earnings and raised its full-year growth forecast. However, analysts were a little worried about the company’s overall revenue growth which reversed many early gains.
BlackBerry Chief Executive John Chen told hacks that he expected it would take another four or five quarters to halt the steady decline in the company’s overall revenue.
Chen said that he did not consider the company in a turnaround phase anymore and now was planning growth.
BlackBerry has gone through a transition in recent years as it tries to build a software business not tied directly to its smartphones.
While still a year from overall revenue growth, investors cheered Blackberry’s improved outlook and the growing role of the software business – which includes mobile device management products, the QNX industrial operating system, and a range of recent acquisitions.
IDC analyst John Jackson said that the part of the business which represents Blackberry’s future was promising.
Chen said software sales should grow at least 15 percent in the fiscal year beginning in March, after sticking to a 30 percent growth target for the current fiscal year.
He declined to say how many devices BlackBerry and its partners sold in the third quarter, but said he hoped to close an outsourcing deal in India and nearby countries in the current period, following two similar deals.
BlackBerry said much of its software and services revenue was recurring in nature, requiring less spending and helping the company earn a record gross margin.
Software and services revenue rose to $160 million from $155 million a year earlier, while hardware sales dropped to $62 million from $220 million.
Revenue fell to $289 million from $548 million, missing the average of analyst estimates, while net losses widened to $117 million from $89 million. That included a write-down related to the sale of two data centres.
Troubled BlackBerry is going to write a cheque for $75 million to invest in a new autonomous vehicle testing hub over several years.
The company’s chief executive John Chen said the smartphone pioneer was looking elsewhere for growth and most of its cash was going on engineering jobs.
The company, which is racing to increase software sales as its handset unit and related legacy service access fees shrink, hopes to make itself indispensable in the automotive industry’s looming self-driving arms race.
BlackBerry is hoping its security and safety credentials help it win a seat at the table as an array of automakers, chip and sensor providers and software developers work in competitive co-operation to bring self-driving cars to the mass market.
BlackBerry will initially work with middleware supplier PolySync and semiconductor company Renesas, as well as its hometown University of Waterloo on its autonomous driving project, but hopes to welcome more companies to its Ottawa facility.
The company’s QNX unit, renamed BlackBerry QNX, currently employs around 400 engineers, some three-quarters of them at its facility in Kanata on the outskirts of Ottawa.
BlackBerry has about 5,000 employees in total.
The embedded operating system market is likely to grow quickly as autonomous driving takes off, but BlackBerry faces numerous competitive threats, including from independent embedded operating system producer Green Hills Software as well as chipmakers such as Intel.
Troubled smartphone maker BlackBerry has done a deal with China’s TCL Communication to make and sell BlackBerry-branded mobile devices globally.
It is the outfit’s first licensing deal since it decided to become a software company.
TCL, which also makes Alcatel-branded mobile devices, will be coupled with BlackBerry’s security software and service suite, Blackberry said.
BlackBerry is betting its future on the more profitable business of making software and managing mobile devices after largely giving up on smartphones.
BlackBerry said in September that would outsource the development of its smartphones, and a month later launched its last mobile device – the Android-based DTEK60, which was made under an agreement with TCL.
The new agreement gives TCL, the fourth-largest handset maker in North America, the right to make and sell BlackBerry-branded smartphones in all countries except India, Sri Lanka, Nepal, Bangladesh and Indonesia, some of BlackBerry’s biggest handset markets.
BlackBerry in September signed a deal giving Indonesia’s BB Merah Putih the rights to make and sell new devices in that country, its largest handset market.
A US appeals court has dismissed a lawsuit accusing BlackBerry of fraudulently inflating its stock price by painting an upbeat picture of the prospects for its BlackBerry Z10 smartphone line.
The 2nd US Circuit Court of Appeals in New York said the lawsuit failed to state a plausible claim and sent it back to a lower court judge to reconsider whether to let the plaintiffs amend their complaint in light of what they said was new evidence.
BlackBerry launched its Z10 phone in January 2013 in a bid to recoup market share lost to Apple iPhone, and Samsung devices powered by Google Android.
While the BlackBerry Z10 had positive reviews, it had terrible sales and saw a $930 million writedown for unsold inventory. BlackBerry shares lost about one-sixth of their value that day.
As a result, the outfit ousted its chief executive officer, Thorsten Heins, less than two months later.
However the lawsuit alleged that BlackBerry attempted to conceal the poor performance of the Z10 in order to artificially inflate its stock price.
The 2nd Circuit upheld US District Judge Thomas Griesa’s March 2015 dismissal of the lawsuit for the failure to allege that BlackBerry and its executives knowingly misled investors.
The three judge appeals panel said the plaintiffs’ claims amounted to “fraud by hindsight” by saying that the defendants must have known the device would be unsuccessful.
The court said that the plaintiffs could try to persuade Griesa to let them amend their complaint in light of new legal developments and evidence that the plaintiffs said would support their claims.
If Griesa refuses to let the plaintiffs amend their complaint, he should explain his reasons, which he had not done before, the judges said.
Troubled phonemaker BlackBerry has said it will stop making its Classic smartphone and consigning the technology to the dustbin of history.
The Classic was launched early last year, with a physical keyboard in the vein of its Bold predecessor and powered by the company own overhauled BlackBerry 10 operating system.
However, while a small number of users still like having a physical keyboard on their phone, they are too few to keep the company going. BlackBerry has since launched a phone powered by Android software and plans several more.
Even so BlackBerry Chief Executive John Chen is pushing his outfit away from making phones and into becoming a software company. He has warned that if the Android phones don’t make cash he is happy to bump them off too.
The company will no longer manufacture the Classic as it updates its device lineup “to keep innovating and advancing our portfolio,” Ralph Pin wrote in his bog on Tuesday.
After ten years ruling the US capital, Blackberry will no longer be the tool of choice for Senate staffers.
The Senate had no choice after BlackBerry decided to discontinue devices running its own BlackBerry 10 software and the Sergeant at Arms says that once he has run out of the current in-house stock, new device procurements will be limited.
The Senate has a little more than 600 BlackBerry phones stockpiled, reads the note, and it will continue to support those phones for the “foreseeable future.”
The news follows this month’s disappointing earnings report from the Canadian phone company, who only sold 500,000 phones in the first fiscal quarter, down from 600,000 in the prior quarter and from 700,000 in the quarter before that. Basically the outfit is going down the loo and is having to find its money from flogging its network services rather than its hardware. However, losing its traditional customers, such as the US government will not look good for the company in the short and medium term, and will cause many to wonder if it will have a long-term future.
It looks like Blackberry has placed its handsets production onto death row and, failing a last minute appeal, could be headed for silicon heaven soon.
Chief Executive John Chen said a decision would be made by September on the future of the unit, which has suffered a sustained drop in sales in recent quarters.
He sees better opportunity in providing services that enable increasingly commoditized hardware to do more.
“I don’t personally believe handsets will be the future of any company,” he said.
However Chen said he had not given up on handsets yet and had made it his top priority to make its devices business profitable.
“The device business must be profitable, because we don’t want to run a business that drags onto the bottom line. We’ve got to get there this year,” he said.
A few years ago, BlackBerry was once the smartphone market leader. The company was practically destroyed by a weird two headed CEO structure which watched as it was replaced by Apple and Google’s Android.
It has worked to reposition itself as a software and service provider focused on device management for large organizations, with some success. Less successful has been its handsets.
In its presentation to investors, the company said it expects the broader market for types of software it is producing to expand to $17.6 billion by 2019, from $525 million in 2012 and below $4 billion in 2015, powered by growth in medical, legal, financial and automotive industries.
Chen said that BlackBerry wants to grow its software revenue by 30 percent in this fiscal year, which he estimated would be double overall market growth, and to notch positive free cash flow.