Switch to software focus sees Canadian firm's shares hit a record high
BlackBerry – a company once viewed in terminal decline – has delighted investors by returning an unexpectedly impressive boost in profits, with shares rising by over 12%.
Holding a third of the US-market in 2010, BlackBerry was soon trumped by phones from Apple and Samsung which eclipsed various attempts at a revival, until it held a market share that rounded down to 0.0%.
In the face of this unbreakable downward spiral, the company stopped making phones last year to focus on software and services, beginning to license their brand and technology to other companies. While some BlackBerry-branded phones still exist, as the brand name is licenced out to Chinese firm TCL, the main company itself has effectively washed its hands of phone hardware.
This appears to be a masterstroke, leaving the company to focus purely on the area that is now making it money. BlackBerry said on Thursday in a profits update that sales at the high margin software unit had hit a record and that their outlook for the rest of the year was robust, a promising sign for the company's investors, as they saw shares rising an incredible 50% this year.
Following a loss of $US372 million last year, it was difficult to predict how the company could claw its way back to relevancy. But the company's posting of an encouraging net income of $US19 million has shown that there is still life in the business yet. This second quarter, the company's revenues were $US249 million higher than the expected $US221 million by the market. The switch from a smartphone maker to a software and services-related company seems to be panning out for the business.
So where is the money coming from? Car-tech, mainly. Currently, there is progress being made in getting their technology onboard self-driving cars after they announced last week that they had secured a deal with the car parts supplier Delphi Automotive.
The BlackBerry chief executive, John Chen, told analysts that he expected the company to earn $US5M-$US25M per model.
BlackBerry already provides in-car information and entertainment software to more than 60 million cars today. Through this, the company reportedly generates $US1.50 and $US5 through their licensing of the technology.
So if you thought you'd seen the last of the BlackBerry, don't be so sure. Even if its days in smartphone hardware are over, for the first time in years, you can actually say that the future looks pretty bright for BlackBerry.