Blackberry has been facing downward spiral in its sales and many stock market experts have presented negative rating for the stock due to shrinking market share. This year, BlackBerry needs to achieve its target of $500 million in software revenue. However, the question is how this target will be achieved. After BlackBerry's fiscal first-quarter report Tuesday, concerns of investors increased even more.
The company crossed Wall Street's targets in every area with the exception of key software category. The company managed to earn $137 million for the quarter, whereas analysts were expecting it to be nearly $83 million.
According to CEO John Chen, "While there's a lot of work to be done in the next four to six quarters, we're definitely on solid financial footing. We're making good progress on distribution, on product portability and there's solid growth in the software business".
The company beat Wall Street by 65%, but its stock dropped. It's recently signed patent-licensing deals with Cisco Systems and another company, which has not been named by the company, led to an unexpected increase in software revenue.
The company is generating revenue from its large base of patents and is considered as a good thing. However, the deals didn't reveal regarding performance of the core software business. It has been estimated by Maynard Um of Wells Fargo that software revenue would be $74 million for the quarter exclusive of those deals.
BlackBerry is dependent on software, when it comes to its future, since its device business is still losing money and its high-margin services segment is continuously facing problems. This fiscal year, achievement of its $500 million target for software revenue seems quite helpful taking into consideration results of Tuesday.