Investors may not be liking the news recently concerning Canadian tech company BlackBerry (BlackBerry Stock Quote, Chart TSX:BB) but CEO John Chen is more than optimistic about BB’s prospects, especially when it comes to the connected car.
Chen spoke to BNN Bloomberg on Wednesday, after his company reported stable first quarter financials that met analysts’ expectations. BlackBerry’s Q1 featured a top line of $247 million, up from $213 million a year ago, and a net loss of $35 million, which was better than last year’s loss of $61 million. (All figures in US dollars unless noted otherwise.) BB generated adjusted revenue of $267 million which was a hair better than the expected $265 million, while its fully diluted EPS of $0.01 per share came in line with the consensus.
Yet, BB’s share price took a beating, falling nine per cent in trading yesterday, in part attributed to lower than expected impact from cybersecurity segment Cylance, purchased by BlackBerry last fall. Cylance contributed $32 million in revenue under GAAP principles and $51 million on a non-GAAP basis.
But Chen sees a long runway ahead, with BlackBerry’s auto segment leading the way.
“I think the shift in the auto space is really between gasoline-powered car and the EV car, and there are two trends that are actually helping us,” he said. “First of all, we work on both —it doesn’t matter if you’re powered by gasoline or electric. The second thing is that there are more and more lines of code going into a car and you see now that they are consolidating and as they consolidate, they need to use some of our technology to protect the safety. We have a leading technology called QNX Hypervisor that allows that to happen.”
“Because of that, we actually see our business growing. Asia is now 30-some per cent of our total car royalty and business side,” says Chen.
Continuing trade tensions between the US and major trading partners China and Mexico are threatening American auto companies like Ford and GM have impacted the auto sector, which ultimately could rub off on BlackBerry, Chen conceded.
“You read that GM and Ford are saying that if the tariffs continue it will really cause them a lot of harm,” Chen says. “Our components are a little bit more immune because it’s more advanced stuff, but of course, if the trade war continues, everyone will be affected. Right now, we’re fortunate enough to be immune from it. And I’m pretty confident that it will be resolved.”