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BlackBerry's turnaround is complete

This isn't Barack Obama or Kim Kardashian West's BlackBerry anymore. And investors couldn't be happier.BlackBe...

Posted: Dec 20, 2017 6:07 PM
Updated: Dec 20, 2017 6:07 PM

This isn't Barack Obama or Kim Kardashian West's BlackBerry anymore. And investors couldn't be happier.

BlackBerry stock surged 10% Wednesday after the Canadian tech company reported solid demand for its software.

Yes, software.

BlackBerry announced last year that it would stop making its trademark phones -- once so popular that they were dubbed CrackBerries and were loved by politicians and celebrities like Obama and Kardashian West.

Instead, BlackBerry decided to outsource the production of hardware running on BlackBerry's operating system to other smartphone makers around the world. That move is clearly paying off.

The company now generates 85% of its sales from software and services. In addition to licensing software to other smartphone makers, BlackBerry has emerged as a big player in connected cars and the Internet of Things thanks to its QNX software unit.

These are much more profitable lines of business than the cutthroat world of making hardware -- where margins tend to be razor-thin. BlackBerry said Wednesday that its gross margins improved to a record high of 77% in the quarter.

The stock is up nearly 75% this year. Some doubted BlackBerry could survive when things looked particularly bleak. I was one of them, to be honest.

But the recent gains are a clear sign that Wall Street loves the turnaround plan of CEO John Chen, who took over in November 2013.

At that time, BlackBerry was reeling. Sales were falling, losses were mounting, and the company was burning cash. It was obvious the company was too late to the touchscreen smartphone game.

Related: BlackBerry's big comeback

People no longer found the QWERTY keyboards on BlackBerrys to be as useful, and the company lost market share to companies like Samsung, which made phones running Google's Android operating system, and Apple and its iPhone.

But Chen quickly embraced Android and de-emphasized BlackBerry's own operating system. Under his watch, BlackBerry launched several phones that ran Android -- and some BlackBerry-branded phones now made by other companies run Android, too.

Meanwhile, BlackBerry has also benefited from more car companies using its own software.

BlackBerry has stepped up its efforts to make QNX a bigger part of the automotive market under Chen as well. QNX now powers the Sync 3 smart entertainment and navigation systems in Ford cars.

BlackBerry is also partnering with chipmaker Qualcomm on more technology for connected cars. (Qualcomm recently settled with BlackBerry on a licensing dispute and agreed to pay it $940 million.)

BlackBerry has deals with big automotive parts suppliers like Magna and Bosch, and it just announced a deal last week with Denso, the largest supplier to Toyota.

And BlackBerry may be just getting started. In an interview with CNNMoney on Wednesday morning, Chen said he wants the company to partner with even more auto companies, particularly the suppliers.

The goal? "We want to make BlackBerry ubiquitous in the auto sector," Chen said. To that end, Chen is even going to the North American International Auto Show in Detroit in January for the first time and will deliver a keynote address there.

Chen said the company will also keep focusing on cybersecurity products for big businesses and governments too. The stock enjoyed a pop earlier this year after the WannaCry ransomware attack as investors realized BlackBerry's security biz could benefit.

Related: BlackBerry soars after WannaCry attack

But BlackBerry isn't abandoning the product that made it famous.

Chen said the company has five contract manufacturers around the world making phones running on some form of BlackBerry software -- and BlackBerry gets royalties on every phone that's shipped.

The company is also looking to expand the use of its software beyond the phone.

Chen noted that BlackBerry announced a patent licensing deal with Timex in September. Timex will pay royalties to BlackBerry, and Chen said Timex could develop a smartwatch running on BlackBerry's Internet of Things technology.

The Timex deal is fitting. Much like the ad slogan for the famous watchmaker, BlackBerry has taken a licking but kept on ticking. And as long as BlackBerry collects big royalty checks, its sales may keep ticking higher.

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 659127

Reported Deaths: 12494
CountyCasesDeaths
Marion903271628
Lake48239872
Allen35663632
Hamilton31929395
St. Joseph29721510
Elkhart25306412
Vanderburgh21173377
Tippecanoe19873199
Johnson16290355
Porter15896268
Hendricks15765300
Clark11885179
Madison11704315
Vigo11538229
Monroe10285159
Delaware9815178
LaPorte9732195
Howard9030195
Kosciusko8529108
Bartholomew7412147
Hancock7392128
Warrick7389147
Floyd7172165
Wayne6616189
Grant6411157
Morgan6054124
Boone605388
Dubois5885111
Dearborn542366
Henry540792
Marshall5406104
Cass539699
Noble508176
Jackson463664
Shelby459390
Lawrence4165111
Gibson401081
Harrison397061
Clinton393753
Montgomery384283
DeKalb384078
Knox355784
Miami355663
Whitley347835
Huntington341276
Steuben337155
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Putnam327359
Ripley325661
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White296151
Jefferson293370
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Decatur269788
Greene260679
Posey260131
Wells256574
Scott249649
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Clay239744
Randolph225276
Spencer216630
Jennings214144
Washington209327
Sullivan202639
Fountain200942
Starke186950
Owen181853
Fulton177737
Jay177328
Carroll176118
Perry173035
Orange170750
Rush164322
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Franklin158835
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Pike127432
Blackford120327
Pulaski106444
Newton96431
Brown94839
Benton91613
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Martin80014
Switzerland7527
Warren75212
Union66910
Ohio52911
Unassigned0429

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 962404

Reported Deaths: 17125
CountyCasesDeaths
Franklin1113121196
Cuyahoga948671715
Hamilton72843954
Montgomery47066879
Summit39845950
Butler35195464
Lucas34971757
Stark29161836
Warren22244270
Lorain21846388
Mahoning19314540
Lake18273301
Clermont18248208
Delaware16320131
Licking14864199
Fairfield14418157
Trumbull14202458
Greene13501212
Medina13263219
Clark12162335
Wood11433193
Portage10897155
Allen10732233
Richland10203205
Miami9969184
Columbiana8077180
Muskingum8068127
Tuscarawas7993235
Pickaway798698
Marion7954137
Wayne7828217
Erie6820184
Ross6092136
Geauga6010129
Hancock5955112
Ashtabula5907144
Scioto5890104
Lawrence521473
Union507852
Darke5016123
Belmont485788
Jefferson4747107
Huron4745117
Sandusky474594
Seneca4633103
Athens459431
Mercer4574101
Washington456487
Auglaize454598
Shelby440168
Knox399586
Putnam3971101
Madison390547
Ashland376695
Fulton376264
Defiance3688102
Brown368242
Crawford355796
Logan351558
Preble351370
Clinton338063
Highland325455
Ottawa320667
Williams300577
Jackson287956
Guernsey284634
Champaign283845
Fayette266844
Perry266243
Morrow257824
Henry243865
Holmes2425104
Hardin242256
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Van Wert228149
Gallia220246
Adams214532
Pike213227
Wyandot208652
Hocking192648
Carroll179528
Paulding158323
Meigs134036
Noble128442
Monroe115636
Morgan99934
Harrison99732
Vinton76515
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