BlackBerry Ltd.'s new chief executive has his eye on lowering expenses as the company works to split its two main businesses and return the firm to some of its former glory.
"A key focus is to return BlackBerry to profitability and positive cash flow, and this requires us to make some tough decisions on our cost structure," John Giamatteo told analysts on a call held Wednesday, roughly a week into his tenure.
Cost-cutting efforts helped the Waterloo, Ont.-based software company — which has pivoted away from its smartphone roots in favour of pursuing cybersecurity and Internet of Things (IoT) software — almost halve its operating cash usage to $31 million in its third quarter, from $56 million a year prior.
Much of that was achieved by slashing expenses in the cybersecurity business and in the company's back office.
Giamatteo warned that the company believes it can go further.
"BlackBerry's business has significantly pivoted and made a number of acquisitions over the years and we see ways to streamline how our back office works," Giamatteo said.
"For instance, despite recent cost reduction efforts, we still have 36 offices worldwide. We have some duplicative teams."
Giamatteo's remarks come as BlackBerry is charting a new future.
At the start of November, it said goodbye to longtime chief executive John Chen, who retired after a decade at the helm of the business.
Chen had been pursuing an initial public offering for BlackBerry's IoT business, but following his departure, the company said it was abandoning the IPO plans.
However, BlackBerry still intends to split its IoT business from its cybersecurity division — a move the company feels will drive efficiencies and value to shareholders.
The split is a top priority for Giamatteo, who was previously president of BlackBerry's cybersecurity business unit and held leadership roles at software firms like McAfee, Solera and AVG Technologies.
Among Giamatteo's other goals is tackling BlackBerry's losses. The company revealed Wednesday that it lost US$21 million in its third quarter compared with a net loss of US$4 million a year earlier.
BlackBerry, which reports its earnings in U.S. dollars, said the loss for the period ended Nov. 30 amounted to five cents per diluted share compared with a loss of nine cents per diluted share a year prior.
Its revenue for the third quarter was US$175 million, compared to US$169 million a year earlier.
Its cybersecurity business was responsible for $114 million, while the IoT business delivered $55 million.
In its fourth quarter ending Feb. 29, BlackBerry expects to see its revenue reach between US$150 million and $159 million, with up to US$88 million coming from its cyber business and up to $66 million from its IoT offerings.
That quarter will be affected by several headwinds BlackBerry has faced, including labour disputes waged by the United Auto Workers, Giamatteo said.
Some of BlackBerry's key products are used by automakers, which saw production volumes challenged during the tensions.
The industry is also dealing with difficulties in delivering "very complex" automotive software solutions.
"While there is no change in strategic direction toward software-defined vehicles, some of the timelines have pushed back because of the near-term headwinds," Giamatteo said.
"So we're taking a more conservative view on our Q4 outlook."
This report by The Canadian Press was first published Dec. 20, 2023.
Companies in this story: (TSX:BB)
Tara Deschamps, The Canadian Press
