BlackBerry, the one-time smartphone titan, is still underestimated after successfully pivoting from money-losing hand-held devices to industry dominance in driver-assisted vehicle software with a growing presence in robotics and other AI-powered products.
asserted
BlackBerry → underestimate → robotics
BlackBerry, which expects to finish its current fiscal year with revenues of as much as $636 million (U.S.), also makes encrypted communications and crisis management systems for governments and other clients.
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which → expect → governments
BlackBerry is “back to being a growth company,” John Giamatteo, the Waterloo, Ont., company’s turnaround CEO declared last spring.
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Giamatteo → declare → ?
It’s a claim backed by impressive increases in financial performance.
uncertain
It → ’ → performance
In September, BlackBerry reported second-quarter revenues of $163 million (U.S.), a 26 per cent increase from the same period a year earlier, and a profit of $33.9 million (U.S.), more than 150 per cent higher than the prior year.
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BlackBerry → report → year
That marked BlackBerry’s sixth consecutive profitable quarter after several years of losses.
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That → mark → losses
But BlackBerry’s stock, currently priced at about $12.50 (Canadian), is trading at a 30 per cent discount to its recent high of $18 in July.
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stock → price → July
The stock is still a casualty of BlackBerry’s legacy of losing its smartphone franchise to Apple almost two decades ago, and the 96 per cent plunge in its stock valuation from a 2008 peak of $83 billion (U.S.).
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stock → lose → billion
And previous turnaround hopes for BlackBerry have been repeatedly dashed.
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hopes → dash → BlackBerry
The company’s volatile stock spiked at least four times from 2012 to 2018 only to resume its downward spiral.
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stock → spike → spiral
In fairness, today’s BlackBerry is practically unrecognizable to a generation of investors who knew the company for its addictive “CrackBerry” smartphone.
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who → know → smartphone
BlackBerry abandoned the smartphone market a decade ago.
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BlackBerry → abandon → market
It is now a dominant maker of lane-keeping and other driver-assistance software that has been installed in more than 275 million cars.
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that → instal → cars
It is also a supplier of ultra-secure communications platforms and has a modest patent licensing business.
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It → have → business
And where BlackBerry once had tens of thousands of customers for its smartphones, it now has a much smaller client base, and that gives it less visibility than it once had.
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it → have → visibility
BlackBerry today has a comparatively small roster of prominent clients and partners.
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BlackBerry → have → clients
They include leading chip makers such as Nvidia; Uber Technologies, which uses BlackBerry software in its robotaxis; British BAE Systems PLC, the largest defence contractor in Europe; and the major European truck makers Daimler Trucks and Volvo Group.
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which → include → Europe
BlackBerry is also a significant supplier to the U.S. government, despite U.S. President Donald Trump’s frequent assertions that the U.S. doesn’t need anything from Canada.
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U.S. → need → Canada
BlackBerry provides its secure communications platforms to the U.S. Secret Service, the White House Communications Agency, the U.S. Senate, the U.S. Air Force and U.S. Cyber Command.
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BlackBerry → provide → Service
But the core of the business is BlackBerry’s QNX division, which makes driver-assistance software and accounts for about half of BlackBerry’s total revenues.
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which → make → revenues
“Our view for some time has been that QNX is really the entire story at BlackBerry,” Kingsley Crane, an analyst at Canaccord Genuity, said in a recent client note.
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Crane → say → note
When Giamatteo took the helm as CEO in 2023, he sold off BlackBerry’s money-losing divisions and rebuilt the company around QNX, originally an Ottawa-based software company that a BlackBerry predecessor firm acquired in 2010.
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firm → take → 2010
Giamatteo was right to focus on QNX.
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Giamatteo → focus → QNX
Its operating system provides several types of driver assistance.
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system → operate → assistance
They include keeping cars from straying out of their lanes, collision warnings, pedestrian detection and blind-spot notifications.
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They → include → lanes
Giamatteo makes a convincing case for QNX’s growth prospects.
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Giamatteo → make → prospects
With new vehicles increasingly digitized, they are more likely to be equipped with QNX’s embedded driver-guidance software, which is a profitable feature for automakers to offer.
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automakers → digitize → software
Growth in BlackBerry’s auto software segment “is being supported by the auto industry’s transition towards software-defined vehicles,” Giamatteo said in a September earnings call.
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Giamatteo → support → call
After several years of refinement, QNX’s operating system has a fail-safe reputation that makes it trusted by global automakers.
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it → operate → automakers
And QNX has cracked non-auto markets in robotics and automated industrial equipment.
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QNX → crack → robotics
In hospitals, QNX software is installed in surgical robots and dozens of medical devices and systems.
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software → instal → devices
Giamatteo claims there is “a tremendous pipeline” of demand for QNX’s non-automotive products, which already account for about 20 per cent of the division’s revenues.
uncertain
which → claim → revenues
And in BlackBerry’s key auto business, it is rolling out a full-scale vehicle software platform called Alloy Kore that it developed with Vector Informatik GmbH of Stuttgart, Germany.
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it → roll → Stuttgart
BlackBerry’s first Alloy Kore contract, inked in September, is with a joint venture of Daimler Trucks and Volvo.
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contract → ink → Trucks
Giamatteo expects it to yield more than $100 million (U.S.) in royalty income in coming years.
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it → expect → years
Even with investors’ muted response so far to BlackBerry’s turnaround, the company has become considerably more valuable during Giamatteo’s tenure.
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company → become → tenure
Its market value has more than doubled to $6.8 billion in that time.
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value → double → time
And BlackBerry is on track to reclaim its former status as a flagship among Canada’s leading tech companies.
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BlackBerry → reclaim → companies
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