BlackBerry results trounce expectations on software; shares rally
By Euan Rocha and Alastair Sharp
TORONTO (Reuters) - BlackBerry's pivot to software began to show traction on Friday, after the company reported a smaller quarterly loss and its first quarter-to-quarter revenue increase in over two years, sending its stock soaring 13 percent.
Significantly, gains in software revenue more than offset a steepening decline in legacy system access fees for the first time, and the Waterloo, Ontario-based company said this trend should continue.
The company may break even in the current quarter, but this could be complicated by investments being made toward growing both software and hardware sales, said Chief Executive John Chen, who sees a return to sustainable profitability in fiscal 2017, which begins March 1.
BlackBerry has staked its turnaround on software and more aggressively licensing its trove of patents after its once-dominant handsets conceded the consumer smartphone market.
"BlackBerry hit a software number that investors have been looking for them to hit for quite some time," said Morningstar analyst Brian Colello. "I think the investment in security, in software, is the right move."
The better-than-expected results were driven by a sharp jump in software and patent licensing revenues and a higher average selling price for phones, driven by the Priv, its new Android-powered device.
"We're planning on other Android phones, but it all hinges on how we do with the Priv," said Chen at a media roundtable, adding the Priv will be hitting over 30 countries this quarter.
Chen, who sees the hardware business possibly turning the corner this quarter, said BlackBerry is open to licensing some of its proprietary software features. Continued...