Mixed results for BlackBerry this year

Canadian technology company BlackBerry announced it will outsource its smartphone development as it reported mixed financial results for its August second quarter report.

The company’s redirection towards software development instead of producing new smartphones is understandable, as its revenues coming from its hardware are falling at a higher rate than its software counterpart.

BlackBerry reported a 30-percent decline in software revenues in its annual 2016 report, while its hardware division reported a towering 40 percent drop in revenues, which were at $887 million in 2016 compared to $1,481 million in 2015. The company also reported a healthy 25 percent reduction in long-term debt from $1,707 million to $1,277 million.

BlackBerry’s software segment was also highly more profitable than its hardware segment during the company’s second quarter, as it reported $29 million in operating income for its software and services division, while its hardware division reported $8 million in operating losses. As such, software represented 44 percent of its total sales last quarter.

“Software and hardware revenues were well below our estimates owing partly to a lack of intellectual property rights licensing revenue and a miss in handsets,” wrote BMO analyst Tim Long in a report regarding BlackBerry’s second-quarter results.

BlackBerry shipped 400,000 smartphones during its second quarter, out of which Long estimates 300,000 were Android-based handsets. These smartphones, like the PRIV and the DTEK50, yielded higher profit margins than BlackBerry’s smartphones running on BBOS, its homegrown operating system, like the Passport or the Classic, which contributed along with software revenues to the company’s record gross margin in its second quarter with a 62 percent profit margin.

Software and hardware revenues were well below our estimates owing partly to a lack of intellectual property rights licensing revenue and a miss in handsets.
— Tim Long, Analyst at BMO

Outsourcing hardware development and manufacturing should lead to an increase in BlackBerry’s hardware segment gross margins, according to Long. However, this division should become a significantly smaller part of BlackBerry’s revenues, as he expects its mobility segment revenues to go down 90 percent next year. Regarding the decision, BlackBerry CEO John Chen said in a statement that it would allow the company to largely reduce its investment requirements while enhancing returns on those investments.

BlackBerry struggled to compete with Android manufacturers and Apple ever since the release of the first iPhone in 2007. Licensing its trademark and software to other manufacturers is a definite turnaround for the company, as it has always built its smartphones itself. However, the move, although surprising, somewhat emulates Apple’s reliance on Chinese manufacturer Foxconn to build its iPhone. 

August Unemployment Report

Canada’s unemployment rate rose 0.1 percent in August to 7.1 percent, basically keeping us right where Canadians were four years ago.

Quebec and Ontario were responsible for all job gains last month, with job increases of 22,000 and 11,000, respectively. Elsewhere, six out of ten provinces reported job losses last month, and Alberta saw a very modest rise with 2,700 new jobs. Full-time jobs across Canada increased by 52,200, which was not quite enough to reverse July’s 71,400 drop.

The economy is stuck in a rut, according to Douglas Porter, chief economist and managing director of economic research at BMO Financial Group. The economy “is mired in an extended period of very sluggish growth, which in turn is keeping job growth very sluggish as well — overall economic growth and job growth are normally very tightly related,” said Porter.

“Slow job growth means that the unemployment rate doesn’t improve, and indeed it has been held steady at close to seven percent for almost four years.”

The overall idleness afflicting the Canadian economy has real consequences: it keeps a lid on wage increases, inflation, and interest rates. It also reduces tax revenue, limiting spending options for provincial and federal governments.

Canada’s economy is part of a global trend leading towards an economic slowdown. Societies, in general, are ageing, and the growth in working age population globally has plodded strikingly during the past ten years. The 2008 financial crisis also did not help, and its aftershocks are still felt today. “The TSX index is now no higher than it was in the spring of 2008 — so that is more than eight years with no net gains in the overall Canadian stock market,” Porter said.

Also, the plunge in oil prices has not only deeply affected Alberta, leading to massive job losses during the past months, but it also had a profound impact on the rest of Canada. Porter said: “As a significant oil producer and exporter, we are very vulnerable to lower oil prices and have been hit hard by the slide in crude prices in the past two years.”

New Apple patent details plans for a cellular MacBook

I think an internal cellular antenna is exactly what is missing from the 12-inch MacBook. It would make it a truly lightweight and wireless terminal/workstation for people on the go, a bit like the iPad is for some people. The iPad has always been available in LTE and Wi-Fi models, and data plans for them are (relatively) cheap, even in Canada. Sure, you can hook up your iPhone to your Mac and use it as a hotspot, but with the MacBook's only port, being able to connect directly to LTE would be a lot less cumbersome. 

Generation Y Not

Generation Y Not is our final project in our Intro to Journalism Audiovisual class at Concordia University.
Team composed of Sarah Jesmer, Jordan Stoopler, Adriano Valente, Sarah Pearless, Juliana Salaun, Sheika Dowagagee, Derek Swales and yours truly.

Gen Y Not /// Trailer

Generation Y Not is our final project in our Intro to Journalism Audiovisual class.
Deadline is on April 13, so you should see a link to it here by then. 

Filmed by Olivier Sylvestre
Editing by Juliana Salaun

Team composed of Sarah Jesmer, Jordan Stoopler, Adriano Valente, Sarah Pearless, Juliana Salaun, Sheika Dowagagee, Derek Swales and I.