It can be tricky calling for a turnaround at BlackBerry.
But here goes.
BlackBerry shares roughly doubled in value to $6 (U.S.) in February from their most recent low in August. But they have since given up some of those gains and now trade at about $4. (All currency in U.S. dollars.)
So, was that a false spring for the Waterloo, Ont., company that popularized smartphones in the first decade of the century before Apple’s iPhone pushed it into near irrelevance?
Or is that stock bounce a prelude to sustained improvement in BlackBerry’s financial performance, pointing to a higher stock price?
BlackBerry has an ugly history of losing money in three of the past five years, totalling almost $1.8 billion in losses.
But John Giamatteo, CEO since 2023, forecasts a sustainable upturn in the fortunes of the $535 million BlackBerry (fiscal 2025 revenues), or what he calls “a significant inflection point.”
And the Long Island, N.Y., native, a veteran of Nortel Networks in its heyday, makes a compelling case.
Giamatteo has streamlined BlackBerry. The former Research In Motion was a hodgepodge of businesses when Giamatteo first arrived in Waterloo.
Most notably, he unloaded a money-losing Cylance cybersecurity unit that was dragging down BlackBerry’s profits. He also cut about $150 million in annual costs and reduced head count by about 37 per cent.
BlackBerry is cash-flow positive for the first time in recent memory.
And the company now consists of just two major businesses — its QNX vehicle software and its Secure Communications unit. Each business is the leading player in its niche.
Giamatteo forecasts increased QNX revenue of $250 million to $270 million this year, up from $236 million in fiscal 2025.
And BlackBerry expects its Secure Communications unit will generate revenues of $230 million to $240 million this year.
The reversal in BlackBerry’s stock trajectory was an investor reaction to the U.S. government’s cost-cutting drive led by Elon Musk. BlackBerry’s Secure Communications unit derives about 20 per cent of its revenues from the U.S. government.
Yet even with the dip in BlackBerry’s share price, the stock still trades 45 per cent higher than a year ago.
QNX is the larger of BlackBerry’s two main businesses, accounting for more than half of BlackBerry’s revenues. And it’s the unit with the most growth potential.
QNX is the dominant supplier of safety, security and performance software in the global auto sector. Its advanced driver assistance systems are embedded in about 255 million vehicles worldwide.
Among its features, QNX software helps keep a vehicle from straying from its lane into oncoming traffic.
BlackBerry, which bought QNX in 2010 when it was based in Ottawa, hopes to expand QNX beyond the auto sector to industrial robotics, medical services, rail transportation and other sectors.
That would return QNX to its roots, making advanced operating systems for nuclear power plants, internet routers, air traffic control systems and other critical applications.
Giamatteo’s revenue forecast for QNX assumes continued sluggish global vehicle sales. A recovery in the market for software-laden vehicles could see QNX exceed the company’s revenue forecasts.
Meanwhile, the AtHoc software product of BlackBerry’s Secure Communications unit has just earned the U.S. government’s highest-level clearance for unclassified data in cloud services.
AtHoc already handles mission-critical communications among U.S. government departments and agencies. AtHoc manages secure and emergency communications on mobile devices, including strategic military planning, national security threats and natural disaster response.
AtHoc is used by all G7 governments and has been approved for use by the U.S. Secret Service, the Internal Revenue Service, Customs and Border Protection and other U.S. agencies.
AtHoc would appear to be a semi monopoly for BlackBerry. It’s unlikely that a rival would go to the trouble and (undisclosed) considerable expense to prove itself compliant with more than 400 U.S. government security standards, as AtHoc has just done.
Giamatteo is confident that BlackBerry’s critical communications products are safe from U.S. government cutbacks. “I think they’re very careful and cautious before they cut things like that,” Giamatteo said in an April conference call. “There’s a lot of other waste and things for them to focus on.”
While it has no plans to sell its Secure Communications unit, a profitable business with an enviable roster of clients, Giamatteo has said he’s open to offers for it.
The sale proceeds could be used for the expansion of QNX, the business BlackBerry is most focused on.
BlackBerry itself is takeover bait, with its diminutive stock market valuation of just over $2.3 billion.
If you take the Street’s highest price target for BlackBerry stock and add the usual 20 per cent takeover premium, BlackBerry shares could command an acquisition price north of $7 — or 70 per cent higher than the current price.
However things turn out, it’s encouraging that during the worst relations between Canada and the U.S. in recent decades, the U.S. government has chosen Canadian technology for its secure communications infrastructure.
