Shares of BlackBerry surged nearly 15% on Friday after the company reported sales that topped Wall Street’s forecasts. The company also reported beat estimates with its adjusted profit, a figure that excludes restructuring charges and other expenses.
Make no mistake, though: BlackBerry, which used to be known as Research in Motion, is a shell of its former self. The stock is down about 95% from its peak in 2008.
And when you include charges, BlackBerry still lost $47 million in its most recent quarter and $1.2 billion for the full fiscal year. Revenues plunged as well.
It’s well known that BlackBerry’s phone business is essentially dead. BlackBerry is transitioning from a company known mainly for old-school smartphones with physical keyboards to a company that develops software for other phone makers.
And that shift appears to be going extremely well.
CEO John Chen said Friday that the company expects to report a real profit this fiscal year. Not a profit after accounting for one-time charges. An actual profit.
Investors are also happy that the company is no longer burning cash. Not long ago, investors were worried BlackBerry was going to run out of money.
But it finished the quarter with $1.7 billion on its books, up nearly $90 million from the end of November.
The company’s shift from hardware to software seems to be paying off. BlackBerry said last September that it would stop making phones itself and would outsource production of BlackBerry-branded phones to other companies.
It was a stunning admission of defeat for the firm, which was once so popular that people referred to its phones as CrackBerries. Former President Barack Obama and Kim Kardashian West were big fans.
But BlackBerry was late to the smartphone game, relying too long on keyboards and its proprietary operating system. Apple, Samsung and others in Google’s Android camp vaulted over BlackBerry in market share.
Even Microsoft — which hasn’t done all that well with its own Windows Phone business after spending billions to buy assets from Nokia, another former king of the handset world — has eked out a bigger share of the market than BlackBerry.
Software and services now account for almost 60% of BlackBerry’s overall sales. It’s also a growing player in connected devices, the so-called internet of things.
Ford is a key partner for BlackBerry. The auto giant uses BlackBerry’s QNX software in some of its cars. And Ford just hired 400 BlackBerry workers to develop connected cars.
So even though BlackBerry had to concede defeat in the smartphone wars, and even though it may never again be CrackBerry, its new focus is giving it a good chance of survival.
