BlackBerry Reemerges As A Software Vendor: What Did It Do Right?

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BlackBerry, which recently announced better-than-expected fourth quarter earnings, is reemerging as a software vendor. The Canadian firm’s software and services revenue was $193 million, about 25% more than a year ago. Software and services revenue was $687 million for fiscal 2017.

BlackBerry makes a comeback

For the tech company, which was formerly popular as Research In Motion (RIM), the journey has been difficult. After several failed attempts to maintain its foothold in the market through many software strategies and hardware releases, the Canadian company lost its position to other companies. But it has now come up with a new plan, diverting its focus entirely to software, and given the recent report, it is making a profit doing it.

In comparison to the analyst estimate of $289.3 million, sales were $297 million ($286 million on a non-GAAP basis). Fourth quarter non-GAAP earnings were 4 cents a share, whereas Wall Street expected break even. However, after including charges, the Canadian firm lost $47 million in its most recently completed quarter.

“I am pleased to report that our Q4 results came in at or above expectations in all major metrics,” John Chen said during the earnings call.

The CEO said that they continued to grow their mix of services and software revenue, allowing them to expand their “operating margin and report positive free cash flow.”

It is clear now that Chen’s plan to remake the Waterloo-based tech company into a software vendor has gained traction. According to BlackBerry, the second phase of its licensing strategy could include medical devices, tablets, wearables, point-of-sale terminals, smartphones and other appliances.

What helped it reemerge as a software vendor?

ZDNet took a look at BlackBerry’s products and the acquisitions and strategies that helped it reemerge as a software vendor. The first was the hiring of Chen as CEO. This gave the company a focus point, enterprise credibility and a turnaround strategy. Then, the acquisition of Good Technology for $425 million gave the company credibility and the tech to handle devices with several operating systems.

QNX, which was used mostly for building new operating systems for smartphones before Chen’s arrival, is now being used in the auto industry. QNX, which can be positioned as BlackBerry’s autonomous driving platform, connects front-end systems like Android and Google with automakers. The QNX latest software works with Intel and ARM and has signed up about 62 partners for a beta, notes ZDNet.

Both Good and QNX are helping the Canadian firm claw its way back up in the market. Chen also pointed out that the self-driving vehicle market and Internet of Things (IoT) are the driving forces in BlackBerry’s financial comeback. And that’s not all; the CEO also expects to report a real profit (not a profit after accounting for one-time charges) this fiscal year.

Investors also look content and happy that the Canadian company is no longer spending cash on hardware (except on Radar).

At 10:34 a.m. Eastern, BlackBerry shares were down 0.77% at $7.69. Year to date, the stock is up almost 12%, while in the last year, it is up almost 3%.

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