BlackBerry Ltd (NASDAQ:BBRY) Bets On Software Business And Targets Sales Of $500 Million By March 2016
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is considering going deeper in the software business as part of the strategy to achieving a meaningful turnaround. The company disclosed plans to grow through acquisitions. With $3 billion in the bank, BlackBerry’s CEO, John Chen, believes that the company can both buy growth and innovate organically through increased investment in in-house R&D.
BlackBerry Ltd (NASDAQ:BBRY) is currently pursuing opportunities in software, services and hardware markets. However, the hardware business has been more punitive for the company in the recent times. BlackBerry only sold 0.8 million smartphones in the last quarter and generated revenue of $490 million. Additionally, hardware sales fell short of the $610 million that analysts estimated on the average for the quarter.
With BlackBerry Ltd (NASDAQ:BBRY) hardware sales failing to live up to expectations, the management of the company has figured out that increased focus on software could give way to true turnaround. BlackBerry’s software sales rose 150% in the last quarter to $137 million.
To build out revenue stream from software, BlackBerry is looking to acquire strategic assets as well as innovate in-house. According to CEO Chen, BlackBerry has made at least five software acquisitions in the last 20 months. The latest major acquisition in the segment was Good Technology for which BlackBerry paid $425 million. Good Technology sells software solution that enables employees to bring their personal devices to work.
With $3 billion in cash, Chen said that BlackBerry is capable of building out its software business with most of the money going to R&D and some funding acquisitions.
$500 million revenue target
Chen is predicting that with proper investment and execution, BlackBerry can generate software revenue of $500 million by March 2016.
Competition in enterprise mobile
The reason BlackBerry Ltd (NASDAQ:BBRY) feels it has a better chance in software than hardware is that its smartphone business is not only slow to pick up, but also coming under increased competition. With its Windows 10 smartphones, Microsoft Corporation (NASDAQ:MSFT) is threatening to displace BlackBerry in the enterprise mobile market. a recent report cited that Windows 10 Mobile was the most secure mobile platform.
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