Blackberry plans IoT push at CES

23 Dec 2015 | Author: | No comments yet »

BlackBerry Jumps as Software Goal, Handset Profit in Sight.

BlackBerry Ltd.’s transformation into a software-first company picked up speed in the third quarter as growth beat analyst projections, resulting in a smaller loss than had been expected. BlackBerry shares jumped more than 10 per cent Friday after the release of a quarterly financial report showing the smartphone company’s revenue was above expectations and its loss was far less than anticipated.TORONTO • BlackBerry reported a narrower third-quarter loss than analysts estimated as software revenue kicked in from its acquisition of Good Technology Corp, helping to offset the struggling handset business.The Canadian software and smartphone company will showcase new advances being made by its infotainment unit at the Computer Electronics Show, a premier gathering of the tech world in January in Las Vegas, Chief Executive Officer John Chen said Friday. “You’re going to see our advanced driver-assist technologies and solutions,” Chen said on a conference call with analysts to discuss earnings results.

With about a month of sales for the new device under its belt, BlackBerry was vague Friday about how its first Android smartphone has performed so far in the marketplace. “Numbers will tell us, but the initial 30 days, so to speak, have been quite positive.BlackBerry Ltd. gained the most in almost a year after boosting software revenue and saying it will likely pull its struggling handset unit into profitability within the next two quarters.

The loss excluding certain items was three US cents (four Singapore cents) a share, the Waterloo, Ontario-based company said yesterday in a statement. Wall Street is hopeful that Blackberry’s new venture into software is showing signs of life after the niche doubled its revenue to $154 million from $78 million in the most recent quarter. And I don’t want to over-hype that situation,” chief executive John Chen told analysts Friday as BlackBerry delivered better-than-expected financial results. Software sales in the Waterloo, Ont.-based company’s fiscal third quarter were up significantly to $162-million (U.S.), an increase of 183 per cent over last year and 119 per cent over last quarter. “In the beginning, everybody is saying that’s unbelievable,” the CEO said of his public pronouncement in September, 2014, that the company would reach $500-million in software sales for fiscal 2016. The Waterloo, Canada-based company said earlier this week it was joining with Luxoft Holding Inc. to work on semi-autonomous driving technology like that used by Tesla Motors Inc.’s cars. “Our software platform actually works with the Apple car strategy as well as Google.

A pioneer of the smartphone industry and the former market leader, BlackBerry lost that position years ago as competitors such as Apple’s iPhone and Samsung’s Galaxy attracted most of its longtime users. Analysts had projected that BlackBerry would report an adjusted loss of 14 cents per share and $489 million US of revenue for the quarter, according to Thomson Reuters. I would love to be able to work with Tesla,” Chen said in an interview with Emily Chang on Bloomberg TV. “Our software is currently in 60 million cars running around, so it’s obvious, natural for us to step into the next generation of automobiles.” The QNX software is now used by manufacturers like Ford Motor Co. to power in-car entertainment systems.

It’s a vindication for CEO John Chen, who has staked his turnaround strategy on software and more aggressively licensing BlackBerry’s trove of patents as its once-dominant handsets have succumbed to the iPhone and Android-based rivals. Chen carefully did not say that BlackBerry will itself be introducing any new connected things in Vegas, merely that it will highlight its initiative in IoT, and that there will be new technology demonstrations and product roll-outs. Chen decided not to provide Priv sales figures, emphasizing that the availability of the device will spike to 31 countries by the end of February when the company’s fourth-quarter ends. Chen confirmed Friday that he thinks that goal is attainable, and said in the final quarter of the year the company will not include one-time intellectual property deals in its calculations. Chen also told analysts BlackBerry’s new Priv handset — its first to run on the Android operating system — has been “well received” since it went on sale last month.

The company saw 43 percent organic growth in its software licensing revenue in its third fiscal quarter, ended Nov. 28, Chen said, hinting that much of this came from QNX. Carmakers have begun incorporating semi-autonomous features in cars like the ability to stay in a lane during turns or sense when the vehicle ahead is stopping and apply the brakes without input from the driver.

BlackBerry has been busy licensing the software to other manufacturers, who are choosing it for their own hardware, including new in-car applications, some in self-driving cars, Chen said. But BlackBerry did provide some information by releasing its usual tally for sales of all devices, including the Passport and other older models that use the company’s own operating system.

Quarterly revenue fell 31 percent to $548 million from a year earlier, but rose 12 percent from the prior quarter, after nine consecutive quarters of declines. As for BlackBerry’s own struggling hardware business, that could yet be saved by the company’s latest smartphone, the Android-based Priv, Chen said. He estimates the enterprise mobility management market is growing at 14 per cent, a level he said was probably attainable without further acquisitions. I anticipate this will result in sequential revenue growth in our software, hardware and messaging businesses in our software, hardware and messaging businesses in Q4.”

Chen is focusing on growing phone sales profitably, and believes the hardware business can reach break-even in the current fiscal quarter, or perhaps the following one. He confirmed about 20 per cent of the revenue growth came from this year’s Good Technology and AtHoc acquisitions, which closed late in the quarter. “BlackBerry hit a software number that investors have been looking for them to hit for quite some time,” Morningstar analyst Brian Colello said in a note.

The Priv’s modest contribution to that profitability may be short-lived: While it’s selling at a higher price than other BlackBerry products, Chen expects to have to cut that price significantly when competitors show off their latest phones at the Mobile World Congress trade show in Barcelona in February. Despite a generally positive quarter, with $557-million in total revenue – ahead of an expected $488.8-million – hardware sales continued to slide and were not even mentioned in the company’s press release or in Mr. Pure software businesses don’t trade at 0.6 times sales, they trade well north of that.” BlackBerry has not been a serious force in hardware since 2012, when it sold about seven million phones a quarter, which was already a decline from its peak in 2011, when its worst quarter was 11.8 million devices. It’s not like stamping out cupcakes – the price is actually justified,” he said. “Under my watch … I have had to build phones that were slightly behind market in terms of power and capacity.

Chen emphasized the first 60 days of Priv’s U.S. sales were limited by a carrier exclusivity deal with AT&T, and the phone will not be available in a full 31 countries until February. Chen, who clarified later that even if BlackBerry stopped manufacturing handsets, it would still be in the mobile phone software business. “We have tonnes of software and IP that absolutely could run not only on Android phones but [also on] Apple phones.

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