Shop Stock: BlackBerry’s revenues dive in fourth quarter as chip supply shortage puts pressure on core technology | Canada | News
BlackBerry Ltd.’s revenue took a dive in the fourth quarter as one of the company’s core technologies, a car operating system software, continued recovering from pandemic-related automotive slowdowns.
Shares of the Waterloo-based company fell nearly nine per cent in after-hours trading on the New York Stock Exchange to US$8.53, following the company’s earnings release Tuesday evening.
Demand for semiconductors, which are used in electronic vehicles and car infotainment systems, has outpaced supply, causing a worldwide chip shortage. This put a strain on BlackBerry’s proprietary QNX software, which is deployed in 175 million cars on the road today.
“It’s not fully clear what the impact will be on production volumes,” executive chair and CEO John Chen told analysts on a call.
“However, we continue to see improvements from BTS in the upcoming fiscal year,” he said, referencing an arm of the company of which QNX makes up a large asset.
The chip supply shortage has caused mayhem for automakers. General Motors announced at the beginning of the month that it would extend downtime at three of its plants at least through March, with the Canada plant on pause until at least mid-April.
Ford announced chip-related stoppages in production, too, as did Toyota, Honda and Subaru — all of which deploy BlackBerry’s QNX software. Because of the shortage, insight firm IHS Markit predicts the global automotive industry will lose US$60 billion in sales this year.
Total GAAP revenues in the fourth quarter, which ended in February, fell 26 per cent year over year, to US$210 million. The company, which records its accounting in US dollars, failed to meet analyst expectations of an average of US$245.1 million, according to Yahoo Finance data.
Non-GAAP earnings-per-share fell inline with analyst expectations of US$0.03, meanwhile the company reported a GAAP net-loss-per-share of US$0.56.
BlackBerry’s software and services prong brought in the lion’s share of revenues (US$165 million) while its licensing division brought in just US$50 million.
Chen attributed this to a deal that’s in the works to sell the company’s patent licenses on mobile, messaging and wireless. The CEO said he could not divulge much more information, other than that the deal is with a North American party and will be a sale of “a reasonably big number.”
“As the patent sale is being negotiated right now, (we) are unable to do other negotiating,” Chen said. “So the pipeline is basically frozen.”
Paul Steep, an analyst with Scotiabank, inquired on the call if the patent sale had anything to do with BlackBerry’s net loss of US$315-million.
Chen said the patent deal was not intended to reduce spending, however the company is parting with some of its real estate.
“We decided to cut down our real estate footprint by up to 25 per cent,” he said, which will result in US$22 million back in hand.
BlackBerry’s decision to reduce its physical space falls in line with other companies, such as Shopify, closing up office space in post-pandemic plans.
“We will have roughly 20 to 25 per cent of our team members that will be working remotely on a permanent basis,” Chen said. “We decided we don’t want to go 100 per cent because we want to maintain a level of creativity (in the office).”
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