BlackBerry's shares jumped Friday after it reported stronger-than-expected quarterly results and said it would be expanding its software licensing business following its decision last year to stop making smartphones.
"What this might mean, and I make no promise, is that you may soon see a BlackBerry tablet," said CEO John Chen in a conference call with analysts after the company released its fourth-quarter and year-end numbers.
While the deal is not yet finalized, Chen said one of the company's partners will make the tablet, which will use BlackBerry's software. BlackBerry (TSX:BB) would receive royalties for each unit shipped.
BlackBerry previously designed a tablet in-house, the PlayBook in 2011, which failed to impress critics.
The licensing deal would be similar to existing arrangements in place with partners who can design, manufacture and sell BlackBerry-branded smartphones in exchange for royalties per phone.
Earlier this year, BlackBerry partner BB Merah Putih launched the Aurora for the Indonesian market. In February, TCL Communication Technology Holdings Ltd. (TCT) revealed a BlackBerry-branded phone with the classic physical keyboard, which is expected to be sold in Canada and several other countries soon.
Chen said he expects to see some revenue from the Aurora this quarter, while TCT's KEYone device likely won't start shipping until May.
He said he'd be disappointed with one million units sold and expects the licensing agreements to pay royalties on multimillion units annually.
The company's transition from making smartphones to providing software and technology services was on track, he said, adding the company had one of its strongest quarters to date for software billing.
Chen said he expects the company to grow its software and services business between 13 and 15 per cent – at or above average market growth – this fiscal year.
Fourth-quarter results were stronger than analysts' forecasts by several measures. As a result, its shares rose 15 per cent to C$10.66 in early trading in Toronto.
BlackBerry's net loss under general accounting rules, reported in U.S. dollars, was $47 million, or nine cents per share – a big improvement from the $238-million loss it had at the same time last year.
Revenue fell to $286 million for the quarter, down 38 per cent from a year before.
But BlackBerry's report was more focused on its adjusted profit of four cents per share, which outperformed the consensus estimate.
The company also did better than the estimate of a net loss of 13 cents per share and revenue of $289 million, according to Thomson Reuters data.
For the full year ended Feb. 28, BlackBerry had a $1.21 billion net loss under general accounting rules and just $1.31 billion of revenue, which was down nearly 40 per cent from fiscal 2015-16.