As BlackBerry fans, we’ve all been anticipating the earnings report and the call that took place at 10:00 EST this morning. I’m not going to offer a full summary of that call, but I will offer my opinion which is in a nutshell, that Chen’s plan is progressing and the most important metric is improving. A few highlights (numbers from Bloomberg) are that total revenue is down 32% to $658 million, handset revenue is down 31% to $263 million, and software revenue is up 153% to $137 million. Another big number (all other numbers from BlackBerry’s statements) that goes along with the software number is that BlackBerry brought in 2,600 new wins for EMM (BES) and 43% of those licenses are cross platform. (I believe this means that 43% of the customers are managing BlackBerry and non-BlackBerry devices with their BES servers, but I think it’s possible that it could somehow mean that 43% of the devices connected to the BES servers are not BlackBerry.)
Other key news from the call this morning is that BBRY acquired Watchdox to secure documents and collaboration with documents, and that BBRY contracted with Wistron and Compal to help them manufacture devices and further reduce BBRY’s liability in device manufacture, the biggest of which I assume, is inventory carrying costs. Lastly, BlackBerry ended the three months ending March 30th with $3.3 billion in cash and investments, which includes $1.6 billion in free cash and cash equivalents.
So as a BlackBerry fan, my take away from the earnings call is that Chen’s plan is working. There was recently a great article published by The Next Million where Chen was interviewed and another in that same issue that discussed turnarounds in general. I found these articles comforting regarding BlackBerry’s turnaround because it was emphasized that turnarounds take time; three years or more for a company to actually thrive again. So, Chen has been at the helm for almost two years and has made the company cash flow positive, and is now focused on stabilizing and strengthening revenues; he is right on track. Let’s not forget, he has done it before at Sybase.
I missed the earnings call but was able to watch a live interview of Chen with Emily Chang, a tech and media news anchor for Bloomberg West.
Here are some of the highlights:
• Software revenue up 153% to $137 million which is on-target for Chen’s goal of $500 million by March 2016.
• BBRY has reduced their investment in devices and increased investment in mobile security and privacy, in SW (assuming he means BES and probably BB10), in Internet of Things, specifically in connected cars, and related applications, and in sales (which I assume is EMM/BES sales to the enterprise).
• BBRY has “better traction with the carriers,” according to Chen.
But here are a few things Chen said that I found really fun.
When asked by Emily Chang if “BlackBerry will make an Android phone,” Chen said “When people ask me if I will ever build one, I say, If I can make it secure, I will.”
When Emily Chang asked Chen about acquisition offers at the current stock price, Chen said, “I’m not listening to any offers.”
When asked about whether the device business is a smart business for BlackBerry to be into, i.e., whether BlackBerry should be offering devices, Chen offered several comments but summed it up by saying, “…We’ll get our device business back on track.”
My take away on Chen’s first comment is that they’re looking into some type of play with the Android OS, but are not confident they can do it securely. I am very happy to hear about this hesitance as I firmly believe they don’t want to dilute their brand with an un-secure OS. John’s second comment is comforting as well, because he said it very firmly and this leads me to believe he is still confident in all his plans and the execution of them. Obviously, I’m also thrilled to know I will be able to continue to use BlackBerry branded handsets going forward; but that was never really in doubt.
I think Chen is generally celebrated by intelligent, institutional investors as being a straight shooter who has delivered on all the promises he made when he first took the helm and is meeting the objectives he set for BlackBerry’s turnaround, and I hope you’re as confident as I am in BlackBerry’s future!