BlackBerry’s Software Focus Gaining Traction

Third-quarter results show Blackberry is making progress with higher-margin software and handsets that foster worker productivity.
Katie Kuehner-HebertDecember 18, 2015

BlackBerry announced better-than expected quarterly results on Friday, suggesting its new focus on software is gaining traction.

The Canadian company has been pushing higher-margin software and services to manage and secure enterprise mobile networks after its attempt to compete with Apple and Samsung in the consumer smartphone market “failed spectacularly,” The Wall Street Journal said. It has augmented the software push with the development of handsets that foster worker productivity.

BlackBerry is making progress on both fronts, reflected in its  third-quarter results. The company said it generated $162 million in software and services revenue in the quarter, and that about 70% of software sales were recurring. Revenue from that business was also more than double the $74 million generated in the second quarter.

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Blackberry shares rose more than 10% in trading Friday, closing at $8.61.

“We delivered accelerating growth in enterprise software and higher revenue across all of our areas of focus,” CEO John Chen said in a news release. “Our new PRIV device has been well received since its launch in November, and we are expanding distribution to additional carriers around the world in the next several quarters.”

The company reported a net loss of $89 million, or 17 cents a share, in the quarter ended Nov. 28, compared with a loss of $148 million, or 28 cents, a year earlier.

Adjusted to exclude items, BlackBerry said it lost 3 cents a share a share. Analysts had expected a loss of 14 cents a share, according to a Thomson Reuters poll.

Revenue of $548 million was down about 31% from a year earlier, but still came in ahead of the analysts’ projection of $489 million. Boosting revenue were sales of the company’s BES12 mobile device management software, along with QNX, which powers in-car infotainment systems.

“Although BlackBerry is largely betting on its software and services business to reignite growth, it remains committed to the sale of devices even though that division commands less than 1% share of the global smartphone market,” the WSJ said.