BlackBerry boosts 2017 profit forecast on software growth

BlackBerry Ltd. boosted its fiscal 2017 earnings outlook and posted a profit in the third quarter, showing the company’s bet on moving more into software and completely away from handsets is paying off. Fiscal third-quarter earnings per share, excluding some items, were 2 cents, compared with analysts’ average estimate of a loss of 1 cent. BlackBerry said it now expects to post a profit for the full year, up from a prior range of break even to a five-cent loss, according to a statement Tuesday. Shares rose as much as 4.4 per cent, the biggest intraday gain in two months. They were up 1.2 per cent to $7.80 at 1.26 pm in New York. Total revenue declined and missed estimates, but the profit numbers and forecast show BlackBerry’s transition to a higher-margin software company from ailing smartphone maker is hitting Chief Executive Officer John Chen’s targets. The adjusted profit margin was almost 70 per cent of revenue, its highest ever. BlackBerry now gets more than half of total revenue from its collection of software products, which include operating systems for car entertainment platforms, secure file sharing software and programs to help companies keep track of their mobile devices. Last week, Chen announced a deal with TCL Corp. to license its brand to the Chinese manufacturer, effectively outsourcing the rights to design, produce and distribute BlackBerry devices around the world. BlackBerry is close to finalising a deal with an Indian partner to license its smartphone brand, similar to the agreement in China and one in Indonesia, Chen said, adding that he hopes to make an announcement before March. Chen said software revenue would grow to about $640 million in the year ending March compared with $494 million the previous year. (Gerrit De Vynck/Bloomberg)