BlackBerry Ltd. stock took a dive Tuesday after the company’s second-quarter revenue fell short of analyst estimates as it experienced difficulties in a legacy unit that sells software and services to businesses.
Shares of the Waterloo, Ont.-based technology company were down about 17 per cent in the first 30 minutes of trading, putting them on track for one of their biggest one-day declines of the year.
Executive chairman John Chen told analysts that the weak revenue was mainly confined to a segment that provides software to organizations that require secure communications, such as government agencies and financial services.
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“All of our businesses performed at, or better than, our revenue expectations – except for enterprise software and services, or ESS,” Chen told a conference call with analysts.
Chen said “we are all disappointed with the short-term results” but added BlackBerry is strategically well positioned in the market for the internet of things and the automotive market.
He said the weak sales at ESS was mainly due to “execution” by a “retooled” sales team that didn’t perform well in closing deals.
Chen provided analysts with an extensive list of individual personnel changes but the major transition announced Tuesday was the appointment of chief financial officer Steve Capelli to a new position, chief revenue officer.
Capelli, who has been BlackBerry’s CFO since September 2016, will officially continue that role until Oct. 1. He’ll be succeeded as CFO at that time by Steve Rai, who has been deputy chief financial officer.
Earlier Tuesday, BlackBerry, which keeps its books in U.S. dollars, reported revenue in what was BlackBerry’s second quarter grew to US$244 million under generally accepted accounting principles, up from $210 million in the same quarter last year.
It also reported a loss of $44 million or eight cents per basic share for the quarter ended Aug. 31. That compared with a profit of $43 million or eight cents per share a year ago.
Using its own non-GAAP metrics, which BlackBerry management and analysts refer to most often, revenue was $261 million and BlackBerry broke even on a per-share basis.
Analysts on average had expected the company to break even with $266 million of adjusted revenue, according to financial markets data firm Refinitiv.
BlackBerry shares were down $1.68 at C$8.25 on the Toronto Stock Exchange and down $1.33 to US$6.18 at the New York Stock Exchange, which handles a majority of trading in the company’s stock.