BlackBerry Ltd. (TSX:BB) has not been doing so well for several years. At one point, it was an internationally recognized name in the smartphone industry, perhaps even the biggest in the space. However, the company fell behind new competitors that introduced far more innovations, and it faded into obscurity.
Fast forward to now. BlackBerry is still alive and kicking but in an entirely different market. The company transitioned into being a software provider. This change in tact was necessary for BlackBerry because it could no longer compete with Apple or Google’s Android smartphones. However, it entered the enterprise software and cybersecurity market, already dominated by Microsoft and several other giants.
The question is, does the stock warrant being a part of your self-directed portfolio? Let’s take a better look at the situation.
Image source: Getty Images
The automotive industry niche
The QNX operating system by BlackBerry was one of its software offerings, and it was geared toward the automotive industry. The OS it introduced has been gaining traction in the sector, but it has the same problem. BlackBerry is competing in an already competitive market, and the company has yet to provide something that differentiates it from the rest.
The company’s recent forays into artificial intelligence (AI) and the Internet of Things (IoT) also haven’t delivered on the promising outlook that might drive growth for BlackBerry. BlackBerry’s lack of consistency in profit margins and a significant 42% decline in its sales between Fiscal 2019 and 2025 also raised a lot of concerns.
It is perfectly reasonable for investors to be wary of its growth prospects and its viability as an investment when you look at its history. However, the tech industry is constantly undergoing changes. This tech stock might still be a good investment for forward-looking investors.
Recent performance
BlackBerry chief executive officer John Gianmatteo considered the February-ending fourth quarter (Q4) of Fiscal 2025 a “transformative year” for the company. The reason? Apparently, the company delivered a surprising performance in the quarter, beating guidance for the quarter. Its adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) reached $21.1 million, and its total revenue crossed $141 million.
A major reason for this uptick was the company parting ways with Arctic Wolf, its cybersecurity business that struggled to compete with industry giants. The 5.5 million Arctic Wolf shares and $80 million cash transaction eliminated the financial burden and provided a big boost to the company.
BlackBerry might not be introducing game-changing innovations, but the decision to become a leaner business might be what it needs.
Foolish takeaway
After the divestiture from its cybersecurity business, BlackBerry is focusing on two primary businesses: Its QNX platform and its Secure Communications division.
The company is expanding its software platform beyond the automotive industry, which is uncertain amid the tariff situation. BlackBerry has a good reputation for providing safety-critical software, which can play out well in the defence, aerospace, medical equipment, and rail sectors. Its other business also exceeded expectations by bringing in upward of $67 million of revenue in its most recent quarter.
Ongoing market uncertainty might still hurt the company’s short-term performance, but its backlog for the QNX platform, leaner business, and improved overall financial situation might make it a good long-term pick for value-seeking investors.
