Shares of enterprise software and Internet of Things specialist BlackBerry (NYSE:BB) fell 9.7% in 2019, according to data from S&P Global Market Intelligence. That may not sound too terrible for a full-year measurement, but keep in mind that the S&P 500 market barometer rose 29% over the same period. The Canadian company’s unfortunate tumble was driven by a couple of underwhelming earnings reports.
Last year started off on a good note as the former mobile device maker’s second-act focus on enterprise software started to pay dividends. After its fiscal fourth-quarter report in April, the stock traded more than 40% higher on a year-to-date basis.
The next report three months later was generally fine, but investors were left unsure about how much value the $1.4 billion acquisition of cybersecurity business Cylance really brought to the table, and BlackBerry’s stock took a 9% haircut that day. In September, the fiscal second-quarter report showed BlackBerry’s sales growth had slowed down to a level that fell short of analysts’ expectations. The stock plunged 22% in a single day based on that report and 24% in September as a whole.
The company formerly known as Research In Motion is posting solid growth in the Internet of Things market, driven chiefly by the embedded operating system QNX. Carmakers appreciate this stable platform as the software solution for their navigation and infotainment systems, unlocking plenty of value in the automotive computing sector.
That being said, BlackBerry’s wins are unpredictable and not quite common enough to support both a growing top line and stable profit margins. Come back when Cylance is pulling its weight and the Internet of Things segment has shown it has a clear path to profitable growth. Until then, I’ll gladly watch BlackBerry from the sidelines.