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Bloomberg
BlackBerry Ltd shares fell the most in a year after reporting sales from its software and services unit slowed and a recent acquisition contributed less of a boost than some
analysts expected.
Revenue in the fiscal first quarter was $247 million, the Waterloo, Ontario-based company said, up 16 percent from a year earlier. BlackBerry reorganised its reporting units, combining the business technology solutions group with the enterprise software and services unit. Now grouped under the Internet-of-Things division, it reported revenue of $136 million, which was down from $147 million in the fourth quarter.
Steven Li, an analyst at Raymond James, said any shortfall would have likely come from enterprise software, since the business technology solutions revenue stream is “typically stable and growing.†Part of the weakness also could have come from a reorganisation of the sales division, according to Todd Coupland, an analyst at CIBC.
After BlackBerry’s $1.4 billion acquisition of cybersecurity firm Cylance, which closed in February, some analysts were expecting to see stronger revenue contributions in the first full quarter in which the purchase is on the books. Revenue from Cylance was $32 million in the three months ended May 31. “People were hoping Cylance would beat expectations more than it did,†Coupland said in an interview. There are concerns about Crowdstrike Holdings Inc., a competitor in cybersecurity, which is growing at a higher rate than Cylance, he said.
The company’s adjusted earnings per share of 1 cent beat analysts’ average estimate of breakeven in the quarter, as BlackBerry absorbed the Cylance acquisition. Shares fell as much as 10 percent to $7.47. It was the biggest decline for BlackBerry since last June. The stock gained 17 percent thro- ugh close. Under Chief Executive Officer John Chen, the company has been positioning itself as a leader in cybersecurity. Cylance will enable BlackBerry to add artificial intelligence capabilities to its existing software products. The purchase was BlackBerry’s largest acquisition in seven years.
BlackBerry is now focussed on its connected and autonomous vehicle technology business (QNX) to drive growth. “The next thing that we have is to put the Cylance AI on to QNX,†Chen said on an earnings call.