BlackBerry shares fell yesterday on uncertainty about what drove growth in the company’s crucial software segment in the first quarter. Shares were off 1.1 per cent after jumping in premarket trading as a BlackBerry earnings report touted a 150 per cent increase in software and licensing revenues. However the result was clouded by uncertainty over the source of the revenues.
BlackBerry said two licensing deals, with Cisco Systems and an unnamed company, made "significant contributions," but did not disclose the terms. It was also not clear how much the deals could boost revenue in future quarters.
"When the headline hits, you say 'wow, they really blew out that software number, good for them, they're starting to get some traction.' But, of course, it's not truly $137 million because there is some licensing in there," said BGC Partners analyst Colin Gillis. "The real number we care about is much less."
On a conference call, analysts grilled executives on the performance of its software business. Chief executive officer John Chen promised to follow up with more details.
Quarterly revenue totalled $658 million in the quarter ended May 30th, slightly lower than the previous period, but software and technology licensing revenue more than doubled from a year ago to $137 million.
Analysts and investors have been concerned about BlackBerry’s ability to increase software revenue as it transforms itself from a hardware-focused company to more of a software and services provider.
“I’m obviously quite pleased with the quarter. We have some very good achievements,” Mr Chen said on the call.
BlackBerry announced the Cisco deal in a separate statement, but said it could not disclose terms. The agreement is part of Mr Chen’s push to licence and monetise the company’s deep pool of patents, which it has built up over the years.
BlackBerry has signed partnership deals with Wistron and Compal Electronics, extending the company's reliance on others for joint development and manufacturing of its devices as it aims for profitability in its handset business.
The company already has a deal in place with Taiwanese electronics company Foxconn Technology. – (Reuters)