BlackBerry Beats Expectations By Posting Profit Amid Declining Revenue

Last year there was a lot of speculation about BlackBerry’s future. The company wrote down inventory worth a billion dollars as two of its BB10 devices flopped in the market. It even shopped itself to potential buyers before taking in a cash injection and hanging up the “for sale” sign. The company’s CEO was replaced by John Chen who then removed most top executives from the previous regimes and brought in his own team. Chen’s priority has been to make the company stable and it slowly inches towards the goal, its first quarterly profit after a string of losses is proof enough.

BlackBerry reported its first fiscal quarter earnings today. It surprised the market by posting a net profit, albeit a small one, of $23 million. Still its better than the $423 million loss the company posted in the previous quarter.

When adjusted to exclude things like restructuring charges and noncash income from a change in the fair value of debentures it comes down to a loss of 11 cents a share, still beating some analysts’ expectations, who were expecting a loss of as much as 26 cents a share.

BlackBerry still struggles in the smartphone market though. Revenue was down 69 percent to $966 million, slightly beating analyst expectations of $963 million. The company said that hardware accounted for 39 percent, services for 54 percent and software as well as other sources accounted for 7 percent of the revenue this quarter.

The small improvement in the company’s fortunes is due to the new CEO’s strategy of tightening the belt. Operating expenses have been cut down by 57 percent from last year and 13 percent from the previous quarter. It was only able to sell 2.6 million devices this quarter, down from 3.4 million sold last quarter. The company also revealed that 65 percent of the devices sold were on BB10.

CEO John Chen has said multiple times that the device business is here to stay and contrary to popular belief BlackBerry is not going to unload it. A couple of months back it released a smartphone developed exclusively for the Indonesian market. The $200 BlackBerry Z3 is now making its way to other emerging markets where BlackBerry hopes to increase market share.

The company is also increasing its focus on enterprise and government, two arenas where it aims to become a major player yet again. Looks like BlackBerry still has got some fight left in it.

Adnan Farooqui
Categories: Cellphones
Tags: BlackBerry, John Chen