BlackBerry stock dives after weak Q2 revenue attributed to legacy software unit

Earlier Tuesday, BlackBerry, which keeps its books in U.S. dollars, reported revenue in what was BlackBerry’s second quarter grew to US$244 million under generally accepted accounting principles, up from $210 million in the same quarter last year. (File Photo: Ben Stassen/Flickr, CC BY 2.0)

TORONTO — BlackBerry Ltd. shares suffered their worst one-day loss of the year Tuesday after the company’s second-quarter revenue fell short of analyst estimates, blamed on difficulties in a legacy unit that sells software and services to businesses.

The weak revenue was mainly confined to a segment that provides software to organizations that require secure communications, such as government agencies and financial services, executive chairman John Chen said.

“All of our businesses performed at, or better than, our revenue expectations — except for enterprise software and services, or ESS,” he said on a conference call with analysts.

Chen said “we are all disappointed with the short-term results” but added BlackBerry is strategically well positioned in the market for the internet of things and the automotive market.

He said the weak sales at ESS were mainly due to “execution” by a “retooled” sales team that didn’t perform well in closing deals.

Chen provided analysts with an extensive list of individual personnel changes but the major transition announced Tuesday was the appointment of chief financial officer Steve Capelli to a new position, chief revenue officer.

Capelli, who has been BlackBerry’s CFO since September 2016, will officially continue that role until Oct. 1. He’ll be succeeded as CFO at that time by Steve Rai, who has been deputy chief financial officer.

Earlier Tuesday, BlackBerry, which keeps its books in U.S. dollars, reported revenue in what was BlackBerry’s second quarter grew to US$244 million under generally accepted accounting principles, up from $210 million in the same quarter last year.

It also reported a loss of $44 million or eight cents per basic share for the quarter ended Aug. 31. That compared with an profit of $43 million or eight cents per share a year ago.

Using its own non-GAAP metrics, which BlackBerry management and analysts refer to most often, revenue was $261 million and BlackBerry broke even on a per-share basis.

Analysts on average had expected the company to break even with $266 million of adjusted revenue, according to financial markets data firm Refinitiv.

BlackBerry shares closed down $2.25, or 22.7 per cent, at C$7.68 on the Toronto Stock Exchange and down $1.70, or 22.6 per cent at US$5.81 at the New York Stock Exchange, which handles a majority of trading in the company’s stock.

This report by The Canadian Press was first published Sept. 24, 2019.

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