BlackBerry CEO John Chen defended his plan to grow the software business as its shares tumbled Friday after reporting revenue that fell short of expectations.
The company said first-quarter revenue came in at US$235 million, down from US$400 million a year ago and below analyst expectations of US$264.9 million, according to Thomson Reuters.
On the Toronto Stock Exchange, BlackBerry (TSX:BB) shares slid 11.12 per cent or $1.63 to $13.03 in early afternoon trading. That setback came after its stock had gained momentum in recent weeks, hitting a four-year high earlier this month.
Chen said during a media roundtable he believes analysts expected last quarter's one-time US$27 million in professional services revenue would reoccur.
Still, BlackBerry outperformed on a number of other benchmarks, including net income, where it reported a profit of US$671 million, a turnaround from the US$670 million loss in the same quarter a year ago. The latest quarter was boosted by a one-time payment received as a rebate from Qualcomm, one of its suppliers, after an arbitrator ruled in BlackBerry's favour.
Chen said he expects revenue from licensing and some software services to increase in the latter half of the company's financial year.
"It's going to be more of a second-half growth, I think," Chen told a conference call with financial analysts earlier in the day.
BlackBerry plans to release the entry-level version of Radar called Radar Light, a fleet tracking technology, in the fall. It will be developed for smaller companies with the intent of growing its market for Radar from eight million to 28 million units. Among those using Radar is FedEx.
The company's cash balance is now $2.6 billion, which Chen said he intends to use to finance acquisitions to expand BlackBerry's market reach.
"The problem we have is we don't have any distribution scale," he said, referring particularly to Radar.
BlackBerry also plans to buy back up to 31 million of its common shares.
There has been speculation of late that BlackBerry could be a takeover target. Citron Research published a report saying BlackBerry is a likely buyout target at a sizable premium, now that its transition from hardware maker to software company is nearly complete.
Chen, who headed software services firm Sybase before it was acquired by German multinational SAP, said such a scenario is an unlikely outcome for BlackBerry in the near future.
"I'm here really to fix it, to build it," he said, though he added he wouldn't rule out a takeover entirely.