BlackBerry Ltd (NASDAQ:BBRY)’s turnaround is finally showing that the beleaguered company is gaining back its footing, says John Chen. Furthermore, the chief executive tells CNBC that he plans to start organic and inorganic investing.
Fortt asked Chen how he feels about how Wall Street is valuing BlackBerry Ltd (NASDAQ:BBRY)’s stock. He said that the company has about over $3 billion cash on hand, while their market capitalization is below $6 billion. How does the CEO feel that about more than half of the company’s market capitalization is cash?
Chen pointed out that to be fair, BlackBerry Ltd (NASDAQ:BBRY) has about $1.4 billion in debt and that has to be included in the equation. He said further this only shows that financially, their company is under control.
“We’re kind of in the second half of the ball game in terms of turnaround. We’ve done the first year [and] done it really well in terms of getting the products out, getting the traction and the distribution, making money. [In the] second year, we’re going to start stabilizing the revenue, continue cash flow positive, [and] we’ll start investing. […] We’re going to do both organic investment and inorganic investment to really drive the software growth,” Chen said.
The CEO said that he “feels really good” about where his company is and that he is “not too hung up on short term stock prices and valuation”. The market will reward his company when they see that it has good traction in growth and revenue.
Meanwhile, according to Chen, BES12 is one of the highlights of the company’s past quarter. It’s one of the only reasons why they showed positive growth at 24% quarter over quarter from Q3 to Q4 and 20% year over year in software, he tells Jon Fortt. He says the company is doing well with regards to BES12 and that he feels good about that part of the business.
As to the question of how good sales of its devices are going, Chen says that it’s actually too early to see the main impact of the new devices BlackBerry Ltd (NASDAQ:BBRY) has released. However, he revealed that his firm is selling about two Classic phones for every Passport.
According to the chief executive, it’s too early to gauge how successful the Classic is because AT&T stores started selling the Classic by the end of February which also happens to be the end of his firm’s quarter. Verizon started carrying the Classic by the beginning of March which is technically another quarter for the Canadian firm. Chen said that they now have 7,000 stores around the world in 68 countries and a lot of carriers signing up to sell its phones.
He said that as for legacy BlackBerry Enterprise Server customers, Chen said that there are about 30,000 legacy enterprise customers. Furthermore, he said that quite a number of them are moving on to BES10 and then to BES12. They are coming back on the server side, he said. He also highlighted Samsung Electronics’ recent agreement to resell BES12 and let BlackBerry Ltd (NASDAQ:BBRY) handle its Knox security program.
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