How the Transition from Hardware to Software Has Changed the Fortunes of Blackberry Ltd (BBRY)?

Blackberry Ltd (NASDAQ:BBRY) (TSE:BB) was once the poster boy of trendy phones. The QWERTY keypads, the broad screens, and the exclusive messenger made Blackberry a fan favorite. It was the only phone one wanted after the flip phones of the 90s stopped being a rage. Snap to 2015 and the celebrated company lost the battle of trendy, fanboys favorite phones to Apple. Scores of Android phone makers created an army of users who loved their phones beyond compare. The good old Blackberry was lost in transition. The company lost user base and investor confidence and was bound to lose itself in oblivion.

BlackBerry Ltd (NASDAQ:BBRY)(TSE:BB)

A new life in software

The company’s fortunes have turned around in 2017. The shift from hardware to software is now complete and the company even topped Wall Street expectations in March. Shares surged by 15 percent, signaling a return in investor confidence. However, the current stock price is 95 percent below the 2008 peak. In the most recent quarter too, the company lost about $47 million. The overall loss for the entire fiscal was $1.2 billion.

Blackberry still pushes forward

The good news is that the smartphone maker chose to not beat around the bush and transition to a new company. Blackberry Ltd (NASDAQ:BBRY) CEO John Chen, who played an instrumental role in this transition, said that he is looking forward to profits in this fiscal year. Today, 60 percent of Blackberry sales are attributed to its software business. The company could generate $139 million solely through software, while reporting $297 million of earnings.

An optimistic Chen backed by investors who once feared the company will burn all its cash, are now waiting for the next fiscal. Wall Street is positive about the company’s non-GAAP numbers too. Analysts suggest that the company could opt for bigger numbers in this fiscal.

Ford partnership highlights Company’s future

The company also found time to become an emerging player in the internet of things business and seems to be doing well. In fact, Blackberry’s QNX software is being used by Ford Motor Company (NYSE:F) among others to help deliver various connected car solutions. QNX’s software is used as a white label solution upon which many automotive makers have built their car infotainment and computer systems upon. The automaker giant recently hired 400 Blackberry employees to work on this project and the company’s hopes are high.

QNX was purchased for $200 million in 2010

Blackberry, then, Research in Motion purchased QNX from Harmon International for around $200 million in 2010. At the time the figure represented 5 times the revenue of QNX. Now the technology is providing a path for the company to expand further into automotive solutions.

When Ford Motor Company (NYSE:F) announced a partnership with Blackberry to create software for self-driving cars, analysts outside the industry were shocked. To their surprise, the company had quietly created one of the most accurate truck radars in the world. This development helped in solidifying the company’s reputation in the deal, eventually landing it a deal with Ford. The self-driving car segment is hot this year. Major technology companies and blue-chip firms are running a race, burning billions of dollars to get the biggest share of this pie. The space is very competitive.

Few companies get second chances in this fast-paced world of technology. Blackberry Ltd (NASDAQ:BBRY), with able leadership and a clear vision for the future, is doing the impossible. The ‘seemingly dead’ stock of the company has also started picking up. As confidence for the company is at an unprecedented high, here is hoping that Blackberry’s revival becomes a case study in innovation.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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