Partners: The Channel Will Play A Key Role In BlackBerry's Revenue Turnaround

BlackBerry reported a second quarter of profit Friday, marking a slow turnaround as the smartphone company focuses on pushing security-based software bundles to entice the enterprise market.

But partners said the Waterloo, Ontario-based company needs to tap further into the channel to gain the adoption of enterprise clients and stabilize its weak revenue.

"BlackBerry's future will depend on their focus of the ecosystem, which is the distributors, resellers and their relationship with clients," said Rick Jordan, director of sales and strategic alliances at Toronto-based BlackBerry partner Tenet Computer Group. "BlackBerry should take a more focused approach on what partners around the world can bring to the table. They’ve done a great job focusing on their core strength and going back to their roots in enterprise security this past quarter. They've got the right message, they just need the people on the front line, in the channel, to get that message to clients."

[Related: 6 Enterprise Moves BlackBerry Has Made This Quarter]

BlackBerry surprised analysts by posting a net profit for its fourth quarter ended Feb. 27 of $28 million, or 5 cents a share, reflecting a significant turnaround from the company's staggering loss in the same quarter a year earlier of $423 million. The company's shares swelled 3.2 percent to $9.60 in premarket trading Friday.

Despite profit reports, BlackBerry still has a long road ahead, as the company reported a revenue drop of $660 million in the fourth quarter from last year's $976 million in the same quarter. Analysts had projected revenue of $786 million.

The revenue drop suggests that BlackBerry is still struggling to affirm sales for its enterprise suite bundles and security-encrypted hardware devices. According to partners, clients have yet to embrace these new product releases and cement the company's slow revenue.

"Our focus this past year was on getting our financial house in order while creating a multiyear growth strategy and investing in our product portfolio. We now have a very good handle on our margins, and our product road maps have been well received," said BlackBerry CEO John Chen. "The second half of our turnaround focuses on stabilization of revenue with sustainable profitability and cash generation."

This past quarter, BlackBerry tapped into its security services lineup with the announcement of several protective software bundles for mobile enterprise clients, particularly its BES12 cross-security platform, which allows companies to manage devices across an array of operating systems, such as iOS, Android and Blackberry.

The company has further enhanced this platform over the past quarter through unveiling BES12 partnerships with Samsung Knox and Android For Work to push its security software to more end users.

The company also announced several security-strapped pieces of equipment, partnering with Samsung and IBM to unveil SecuTablet, an ultrasecure version of the Galaxy Tab S 10.5, to be released in the summer, and announcing the release of BlackBerry Leap, a 5-inch smartphone to come out in April, featuring several productivity and security attributes.

BlackBerry's key to strengthening revenue, however, is getting clients on board, according to partners.

"BlackBerry has amazing products, but they're only amazing if clients want and need them," said Jordan. "From a security standpoint, the company just needs to get clients on board. It will take time, but they're on the right track."

PUBLISHED MARCH 27, 2015