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Prem Watsa's BlackBerry Rises on Strong 4th-Quarter Earnings Beat

- By James Li

BlackBerry Ltd. (BB)(BB.TO), Fairfax Financial Holdings Ltd. (FFH.TO) CEO Prem Watsa (Trades, Portfolio)'s top holding, said on Friday that net revenues for the quarter ending Feb. 28 increased 8% year over year, driven by double-digit software and services revenue.


The Waterloo, Ontario-based company reported net earnings of 11 cents per share, outperforming analyst estimates of 4 cents per share. Operating income of $58 million represented the 12th consecutive quarter of positive operating income.

Company accelerates software and services business

BlackBerry CEO John Chen said on the earnings call that strong revenue in the company's software and services business, which represents approximately 96% of total revenue, reached a record high $246 million during the quarter and $845 million during the fiscal year. Strong billings primarily from financial services companies and government verticals contributed to 10% revenue growth for the year, near the high end of management's guidance.

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Chen also updated investors on BlackBerry's acquisition of Cylance, a privately held artificial intelligence and cybersecurity company based in Irvine, California. According to the CEO, Verizon Communications Inc. (VZ) selected BlackBerry's Cylance for its managed securities portfolio, enabling the company to expand its Cylance offerings to the telecommunications industry.

Stock rises on earnings beat and positive outlook for upcoming fiscal year

Shares of BlackBerry opened at $9.87, up 99 cents or approximately 11.14% from Thursday's close, on the strong earnings beat and positive outlook for the upcoming 12 months.

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Watsa said in his fourth-quarter shareholder letter that BlackBerry, with Cylance and autonomous-car operating system QNX, has potential to become a growth company again. Chen estimated total revenue growth between 23% and 27% for fiscal 2020, driven by double-digit revenue growth in billings and between 8% and 12% revenue growth in licensing and Internet of Things.

Disclosure: No positions.

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This article first appeared on GuruFocus.