BlackBerry shares plunge on outlook cut, revenue miss

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BlackBerry shares plunge on outlook cut, revenue miss

Canada's BlackBerry missed quarterly revenue estimates and cut the top end of its full-year forecast on Tuesday, hurt by weakness in sales of enterprise software, sending its shares down as much as 19 percent to near four-year lows.

Once known for its phones, BlackBerry now sells security software such as those used by corporations and government agencies. The company is also focusing on software used in emerging areas like driverless cars.

Adjusted revenue from BlackBerry's Internet of Things business, which includes the technology solutions and enterprise software and services (ESS) units, fell 5 percent to US$134 million, missing estimates for the second straight quarter. Analysts on average had expected revenue of $150 million from the business.

The technology solutions segment, which houses QNX - a software used by carmakers to provide infotainment and other services to customers - continued to perform well with double-digit growth, but there was softness in the ESS business, chief executive John Chen said on a post-earnings call.

Raymond James analysts estimated a revenue fall of 15 percent to 17 percent in the enterprise software segment.

"I would say that the weakness of ESS is really on execution," Chen said, attributing it to changes in its sales team.

The company said it now expects current-year revenue to rise between 23 percent and 25 percdent, compared to its earlier forecast of 23-27 percent.

In response to a question from an analyst about competition, Chen said the company saw Microsoft being "a little bit more aggressive".

BlackBerry posted a net loss of $44 million in the second quarter ended 31 August, compared with a profit of US$43 million a year earlier, as it invested heavily to integrate recently-acquired Cylance. In February, the company bought the cybersecurity firm, whose software uses machine learning to pre-empt security breaches.

BlackBerry's operating expenses rose nearly 80 percent to $219 million in the quarter.

On a per share adjusted basis, the company broke even, in line with analysts' expectations.

Adjusted revenue rose about 22 percent to $261 million, missing estimates of $266 million, according to IBES data from Refinitiv.

BlackBerry's shares fell to $6.08 and the Toronto stock dropped to C$8.06.

(Reporting by Debroop Roy and Arunima Kumar in Bengaluru; Editing by Maju Samuel)

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