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BlackBerry Falls this year as revenue reports



(Bloomberg) – The BlackBerry Ltd shares fell the most for a year after reporting the sales of software and services had slowed, and a recent acquisition contributed less of a boost than some analysts expected.

Earnings in fiscal first quarter was $ 247 million, Waterloo, Ontario-based company said Wednesday, up 16% from the previous year. BlackBerry reorganized its reporting units, combining the business technology solution team with the enterprise software and service. Now grouped under the Internet-of-Things division, it reported revenue of $ 136 million, down from $ 147 million in the fourth quarter.

Steven Li, an analyst at Raymond James, said it was likely that some deficiencies would come from the business software, since the business technology solution's revenue stream is "typically stable and growing." Part of the weakness could also have come from a reorganization of the sales department, according to Todd Coupland, an analyst at CIBC.

After BlackBerry's $ 1.4 billion Acquisition of cyber security firm Cylance, which closed in February, some analysts expected to see stronger revenue contributions in the first full quarter where the purchase is on the books. Revenue from Cylance was $ 32 million in the three months of May 31. "People hoped Cylance would beat expectations more than it did," Coupland said in an interview. There are also concerns for Crowdstrike Holdings Inc., a competitor in cybersecurity, growing more than Cylance, he said.

Key Insights

Adjusted earnings per share at 1 cent beat analyst average estimate of breakeven in the quarter, when BlackBerry absorbed the Cylance acquisition. Shares fell as much as 10% to $ 7.47. It was the biggest decline for BlackBerry since June last year. The share had reached 17 per cent through Tuesday's closing. Under CEO John Chen, the company has positioned itself as a leader in cyber security. Cylance will enable BlackBerry to add artificial intelligence capabilities to existing software products. The acquisition was BlackBerry's largest acquisition in seven years. Blackberry is now focused on its connected and autonomous vehicle technology business, QNX, for growth. "The next thing we have is putting Cylance AI on QNX," Chen said on a revenue call.

Know more

Earlier this week, Waterloo, Ontario-based company said its security and connectivity software was now installed in 150 million vehicles, up 25% from the previous year. BlackBerry's QNX technology is used by car manufacturers such as Honda Motor Co., Ford Motor Co. and BMW AG in driver assistance and hands-free systems. Blackberry confirmed that it expects annual adjusted revenue growth of 23% -27% in financial 2020. Read the statement here.

(Updates with stock trading this year. An earlier version of this story corrected the day the company reported in second paragraph.)

To contact the reporter on this story: Simran Jagdev in Toronto at sjagdev1@bloomberg.net

To contact the editors responsible for this story: Molly Schuetz at mschuetz9@bloomberg.net; David Scanlan at dscanlan@bloomberg.net

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