BlackBerry will turn things around “very shortly”, John Chen says

2018 has been all downhill for BlackBerry (BlackBerry Stock Quote, Chart NYSE, TSX:BB), whose stock has lost 43 per cent of its value since an early January high.

But investors can expect a turnabout in the near future, says CEO John Chen, who thinks shareholders should be pleased by his company’s corporate execution and financial stability.

Chen spoke to BNN Bloomberg about his company’s recently announced Security Credential Management System (SCMS), which it plans to make available for free to car companies and public offices looking to implement smart cities technology, with the company saying that SCMS will allow for the safe and private transfer of information using digital certificates, an issue which Chen says sets his company apart.

“Today, if you ask our competitors about the software that manages devices, I think that they will tell you that they give us the gold star for it,” says Chen, to BNN Bloomberg. “The reason why [BlackBerry operating system QNX] is rather successful compared to others in the market — and it’s not cheap — the reason why we’re so successful is that we’re recognized as the number one safety solution.”

BlackBerry made a big splash last month in acquiring Irvine, California-based cybersecurity firm Cylance for $1.4 billion, the largest purchase in company history. Chen has called the deal a perfect fit, saying that Cylance Artificial Intelligence will support his company’s end-point management business as well as security and threat isolation business. (All figures in US dollars.)

“BlackBerry has always been a mobile-first company, and yes, we do protection on mobile devices but we don’t do it as much on so-called fixed assets — the laptop and the PC and the network gear and all of that — and Cylance focuses on all of that, so the combination is synergistic from that perspective,” Chen says.

“We’ve got about 120 million users of our car software, and a big part of future business relies on the safety and security of cars, especially when cars drive themselves. They need to achieve a certain standard. I think that what Cylance does, using Artificial Intelligence methodology to detect and analyze if there is a threat, then isolate it and fix it. I think that’s a really useful technology for us to inject into the automobile and the autonomous platform, and not only the car but the plane and the train.”

BlackBerry, which will be releasing its fiscal third quarter 2019 earnings next week, posted top and bottom line beats in its Q2 report of late September, then coming in with earnings of $43 million or eight cents per basic share, well above the $19 million or four cents per share of a year earlier and better than the analysts’ consensus estimate of one cent per share. Revenue also impressed at $210 million, though it still represented a 12 per cent decline year-over-year.

Chen says that the pattern of diminishing revenue should end soon, which he says will please BB shareholders.

“I think [shareholders] like the fact that we are financially stable and viable now and we have a strategy that looks like it’s in the right space,” he says. “They are looking for execution, to build the revenue, and we’re trying to eliminate or cover the decline —and we’ve been covering i — with growing margins, and you should start seeing some growth. It’ll be very shortly.”