BlackBerry's Turnaround Isn't Near

It's no secret that BlackBerry Limited BB is in desperate need of some good news. But shares 1.7% after the company posted quarterly results on Tuesday despite the communications software maker beating Wall Street expectations. All in all, a once smart-phone company is staying afloat due to its move into cybersecurity software and IoT products. Once a failing smartphone maker now seems like a mediocre software and cybersecurity company.

Third Quarter Results

Revenue declined from last year's comparable quarter of $218 million to $184 million, resulting in net income of $74 million, or a loss of 5 cents a share on a diluted basis, which is an improvement to last year's loss of $130 million, or 23 cents a share. Adjusted earnings were break-even a share.

IoT

Despite ongoing supply-chain challenges, the company's QNX business achieved a quarterly record for design-related revenues, performing even better than expected.

Cybersecurity

Blackberry's recent unified endpoint security product launches had a tough time facing off next-generation players.

A Storyline Without a ‘Happy-Ending' in Sight

After it discontinued its first-party smartphone business half of a decade ago, BlackBerry aggressively expanded its enterprise software business, with its biggest acquisition being the cybersecurity firm it bought for Cylance for $1.4 billion at the beginning of 2019. In fiscal 2020 that ended on February 28^th that year, revenue rose 15% but most of that growth came from Cylance's integration, along with higher licensing revenue from the company's patent portfolio.

But at the end of fiscal 2020, the onset of COVID-19 froze the automotive market which throttled the growth of the Internet of Things business which generates most of its revenue from QNX, which is the world's most popular embedded operating system for connected vehicles.

In fiscal 2021, BlackBerry's revenue declined 14% as the pandemic caused sluggish auto sales with the ongoing chip shortage and supply challenges only making the situation even worse. Its enterprise software and security business are also facing strong competitors such as Palo Alto Networks PANW and CrowdStrike CRWD, both of which are growing much faster.

Outlook Isn't Bright

Blackberry's dependence on the auto industry for its long-term turnaround is a risky bet. There's also the fact that the ongoing chip shortage will go well into 2022. Along with the incentives for EV adoption, inflation and high gas prices are making gas-powered cars less attractive. Therefore, BlackBerry's recovery is hanging by a threat. Although its IVY platform seems promising, it cannot move the needle either for the company's revenue nor the QNX as it will be installed in a limited number of 2023 model vehicles next year, therefore it won't move the needle for QNX or BlackBerry's total revenue anytime soon while the company continues dealing with ongoing losses and declining gross margins.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: contributors@iamnewswire.com

The post BlackBerry's Turnaround Isn't Near appeared first on IAM Newswire.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. The content was purely for informational purposes only and not intended to be investing advice.

Image Sourced from Pixabay