BlackBerry Fights Its Uphill Battle

Just when the market thought that all was lost for BlackBerry, Blackberry delivers a quarter that was better than market expectations, and the company claims that the worst is over and they are all set on the road to recovery. Really?

BlackBerry’s Financials
BlackBerry’s (Nasdaq: BBRY) first quarter revenues fell 69% over the year to $966 million, ahead of the market’s projections of $963 million. Loss per share was significantly better than the Street’s estimated loss of $0.26 per share.

By segment, Hardware revenues accounted for 39% of the quarter’s revenues. Services revenues contributed 54% of the share and the remaining 7% came from Software and other sources. By region, North America contributed 29% of the quarter’s revenue while Europe, the Middle East and Africa brought in 43% revenues. Latin America brought in 13% and Asia Pacific brought 16% of the revenues. During the quarter, phone sales fell 62% over the year to 2.6 million smartphones.

BlackBerry’s Product Upgrades
BlackBerry continues to depend on newer smartphones to help gain market share. Their latest phone, the square shaped Passport, is expected to release next month. Major details of the phone have been kept confidential, but some sneak previews have generated very positive reviews. The phone’s biggest selling feature is its 4.5 inch HD square screen that will be particularly useful to people who like to read on their phones. Additionally, its keyboard also acts as a touchpad so that users can swipe to choose numbers and characters while typing.

They recently also entered into a licensing deal with Amazon that will enable them to bring Amazon’s Appstore to the customers using the BlackBerry 10.3 operating system. The move will provide BlackBerry 10 users with access to more than 240,000 Android applications from the Amazon Appstore.

Last month, BlackBerry also opened their messaging service BBM to Windows Phone users. This is expected to make BBM more attractive to their enterprise customers especially since BlackBerry is marketing the service as a “secure communications tool for government agencies and regulated sectors”.

BlackBerry’s Security Enhancements
BlackBerry’s biggest selling point remains their highly secure environment that has attracted several enterprises as their preferred mobile device. Recently, the company also won key security clearance from the US Defense Information Systems Agency that will enable their customers in various US Department of Defense agencies to use the BlackBerry Enterprise Service (BES) 10 system to manage and secure devices powered by Android and iOS.

BlackBerry is also counting on the acceptance of BES10 in markets like India where enterprise customers are looking for highly secure services while enabling users to access multi-platform devices.

To further strengthen their security offerings, BlackBerry recently announced the acquisition of a privately held German firm Secusmart. Secusmart focuses on providing voice and data encryption services and provides encryption and anti-eavesdropping services for governments, organizations, and telecommunications service providers. Their products are being used by the Canadian and German governments to protect their devices. Terms of the deal were not disclosed.

Despite all the moves, BlackBerry has a long way to go. According to the recent IDC report for Q2 2014, global smartphone shipments improved 25% over the year to 301.3 million units. Android OS retained the biggest lead with 84.7% of the market. Apple came in a distant second with 12.7% market share, followed by Micrsoft’s 2.5% share. BlackBerry had a minuscule 0.5% of the market.

BlackBerry’s enterprise market positioning is also no longer secure. Recently, Apple and IBM entered into an agreement that will help push Apple’s products within the enterprise.

BlackBerry’s stock is trading at $10.31 with a market capitalization of $5.35 billion. It touched a 52-week high of $11.65 earlier last month.