Canadian Security Magazine

BlackBerry CEO Chen says he’s looking to acquire a security company

By David Friend for The Canadian Press   

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BlackBerry chief executive John Chen said Friday he's on the hunt to acquire a security company, and may tap into some of his company's growing cash reserves to make it happen.

The head of the Waterloo, Ont.-based technology firm told reporters that he’s looking to beef up the business by picking up a smaller operation that specializes in security.

He declined to offer any more details, noting BlackBerry is still scouring the market for candidates and isn’t near actually signing a deal.

“We have a team of people that have been looking,” he said, after the company reported its latest quarterly results.

“Acquisition is part of our strategy of this year.”

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BlackBerry reported it squeezed out a small profit in the fourth quarter, giving analysts a welcome surprise, even though its revenue figures still fell short of their expectations.

The company, which reports in U.S. dollars, earned US$28 million or five cents per share compared with a loss of $423 million or 80 cents per share a year earlier.

The results were less impressive when it came to BlackBerry’s revenue, which includes sales of its phones and software services. Overall revenue dropped 32 per cent from a year ago to $660 million, significantly lower than analyst expectations for $786 million.

On the upside, the company managed to add $608 million to its cash reserves, which sat at a record $3.27 billion at the end of the quarter.

“Now that we have a cash generation capability we’re going to invest,” Chen said, adding that he plans hire more people at BlackBerry’s offices to help grow its software business, in addition to searching for acquisitions.

BlackBerry went on a shopping spree last year to add to its slate of security technology services which are aimed at the business community and government.

In December, BlackBerry acquired Secusmart, a German firm that uses voice and data encryption to prevent eavesdropping, while earlier in the year it picked up Movirtu Ltd., a manufacturer of virtual SIM cards that let users have more than one phone number associated with their device.

Chen was brought in as CEO just over a year ago with the main goal of making BlackBerry profitable again. He began a widespread effort to reduce costs, and reshape BlackBerry’s business model.

Cost management was a major focus of the quarter, which ended Feb. 28, as BlackBerry pulled back expenses another 22 per cent to $424 million compared to the third quarter.

However, the popularity of BlackBerry phones is still fading across most regions. In the fourth quarter alone, sales of BlackBerrys dropped 38 per cent in North America, 23 per cent in Europe, the Middle East and Africa and 29 per cent. The Asia-Pacific region, where BlackBerry continues to enjoy a stronger popularity in some countries, sales dropped a lesser 14 per cent.

About 1.6 million BlackBerrys were sold to customers in the quarter, a figure that includes its Classic model, a throwback to its popular older smartphones with an updated design.

Software revenues are becoming a stronger area of growth, with sales rising 20 per cent to $67 million over a year earlier. However, software only makes up 10 per cent of overall revenue, while the hardware business represents 42 per cent. Service fees deliver most of the rest.

Chen has stated in recent months he wants BlackBerry to generate US$500 million of software revenues in the company’s new financial year, which began this month.


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