Why BlackBerry Is Showing Signs of Stability Under CEO John Chen

Why BlackBerry Is Showing Signs of Stability Under CEO John Chen
BlackBerry Still Has Big Cash Reserves to Keep the Business Going
BlackBerry Is Doing a Better Job at Controlling Costs
Revenue Might Not Matter as Much as You Think
The Loss Is Looking Better and Better
It's All About the Enterprise
Can BlackBerry Classic Boost Hardware?
BlackBerry Messenger Will Be a Factor in Future Growth
BlackBerry Plans to Be More Mobile OS-Agnostic
BlackBerry EZ Pass Is Proving Popular
BlackBerry Technology Solutions Could Be a Breakout Hit
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Why BlackBerry Is Showing Signs of Stability Under CEO John Chen

By Don Reisinger

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BlackBerry Still Has Big Cash Reserves to Keep the Business Going

One of the biggest reasons companies fail is their inability to raise cash and keep it. Luckily for BlackBerry, that isn't as much of a problem as it was over the past couple of years when it was losing billions of dollars. Despite the net loss of $148 million, the company reported that in its last fiscal quarter, it added $43 million in cash to its coffers, bringing its total on-hand cash and investments to $3.1 billion. That's cash that the company has to fund future operations and growth opportunities.

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BlackBerry Is Doing a Better Job at Controlling Costs

One of the big takeaways from BlackBerry's earnings call is the company's ongoing commitment to cost reductions. Compared with the same period last year, all of BlackBerry's major costs, including research and development, marketing and hardware costs, were down. That has helped BlackBerry significantly improve its stability.

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Revenue Might Not Matter as Much as You Think

There's no doubt about it: If a person were to examine the state of BlackBerry based solely on its revenue, things would appear to be grim. During the same period last year, BlackBerry posted revenue of $1.2 billion. In the most recent completed quarter, its revenue was at $793 million. However, in 2013, BlackBerry lost $1.3 billion on that revenue before operating expenses were factored in. This time around, its gross margin hit $410 million.

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The Loss Is Looking Better and Better

Although BlackBerry posted a net loss in the latest quarter of $148 million, it was actually an improvement over the last several quarters. At the end of the year-ago quarter, BlackBerry had a net loss of $4.4 billion. What's worse, for the nine months ended Nov. 30, 2013, BlackBerry's net loss was $5.5 billion. This year, that's down to just $332 million. Remember: Everything must be considered within the proper context. And while BlackBerry is still losing money, its situation is much improved from a year ago.

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It's All About the Enterprise

So, how did some of BlackBerry's successes come about this quarter? It's focusing on strengths that set it apart from its mobile market competitors: enterprise-grade security and services. BlackBerry CEO John Chen has made it clear that the consumer market is not going to help the company succeed, and it needs to continue to provide hardware and software solutions to corporate customers to stage a turnaround. At least so far, it appears that idea is working.

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Can BlackBerry Classic Boost Hardware?

Last week, BlackBerry announced the Classic, a new smartphone that has a small, 3.5-inch screen and a physical keyboard like the BlackBerry devices of old. The handset, which costs $449, is available now and will ship by the end of the year. BlackBerry isn't willing yet to give up hardware, though it contributes quite a bit to its costs, and it believes the Classic could help it attract more enterprise customers. Only time will tell if that's true.

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BlackBerry Messenger Will Be a Factor in Future Growth

BlackBerry has said that its mobile-messaging platform, BlackBerry Messenger, will play a crucial role in its business in the coming years. The software is platform-agnostic and has been attracting many more customers. In BlackBerry's previous fiscal quarter for the period ended Aug. 30, BBM's monthly active users were up to 91 million from 85 million in the previous quarter. BlackBerry didn't say how many users were active on BBM at the end of its last reported quarter, but some analysts say that figure is approaching 100 million.

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BlackBerry Plans to Be More Mobile OS-Agnostic

BlackBerry is fully aware that in today's mobile market the BlackBerry 10 mobile OS can't regain substantial market share against Android and Apple's iOS. In fact, the company has clearly stated that it's not going to lock down users into BlackBerry and will offer solutions on any platform customers wish. What's more, BlackBerry didn't even discuss the market status of it mobile operating system in its latest financial release, indicating all the more that its future success depends on being more OS-agnostic.

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BlackBerry EZ Pass Is Proving Popular

BlackBerry EZ Pass, which is system enabling companies running BlackBerry 10 or other mobile operating system platforms to integrate with BlackBerry Enterprise Server, has been taking off, the company says. BlackBerry's EZ Pass Program has brought in 6.8 million licenses for BlackBerry Enterprise Server, representing a 100 percent gain compared with the previous quarter. Perhaps most importantly to BlackBerry, more than 30 percent of those new licenses came from other mobile device management solutions, like Good Technology.

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BlackBerry Technology Solutions Could Be a Breakout Hit

BlackBerry Technology Solutions, a new division within the company, has become a shining star, despite not getting the kind of attention it might deserve. BlackBerry's Technology Solutions unit is made up of the company's QNX software, security systems such as Certicom cryptography and antenna tuning technology designed to improve reception. Perhaps most importantly, it holds BlackBerry's powerful patent portfolio and focuses on the ways in which the company can get into opportunities related to the Internet of things. While Technology Solutions doesn't get a lot of attention, it should help return BlackBerry to sustainable profitability in the coming years.

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