Transformation from loss-making smartphone maker to software firm continues as quarterly profits rise and yearly outlook is ‘robust’

This article is more than 2 years old

This article is more than 2 years old

The transformation of BlackBerry from a bombed-out, loss-making smartphone maker to a new-look software firm appears to be working: the Canadian business has reported better-than-expected quarterly profits, boosting its shares by more than 12%.

The company, which was famous for its tiny keyboard phones and in 2010 had more than a third of the US smartphone market, was almost driven to extinction by the iPhone. By 2016 it had less than 1% of the US market. Thousands of workers were laid off as losses mounted and the business eventually gave up making phone handsets and decided to reinvent itself as a software and services specialist selling to large corporations.

In its profits update on Thursday the company said sales at its high-margin software unit had hit a record and the outlook for the rest of the year was robust, boosting investor confidence in its turnaround strategy. Its shares have risen 50% this year.

The company posted net income of $19m (£14m), following a loss of $372m last year.

Facebook Twitter Pinterest BlackBerry’s chief executive, John Chen, said the firm plans to expand into more advanced self-driving vehicles. Photograph: Aaron Harris/Reuters

“There are some exciting growth opportunities,” said a Morningstar analyst, Ali Mogharabi, citing BlackBerry’s progress in getting its technology into self-driving cars.

Last week the company announced a deal with the car parts supplier Delphi Automotive on a software operating system for self-driving cars.

John Chen, the BlackBerry chief executive, told analysts on Thursday that he expected the company to earn $5 to $25 a car as it expands into more advanced self-driving vehicles. It is already a leading provider of in-car information and entertainment software, which Chen said generates between $1.50 and $5 per vehicle.

Most of BlackBerry’s revenue now comes from managing phone systems for other businesses, but it expects the car industry and industrial applications to drive future growth.