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March 28, 2014 6:00 pm
John Chen, BlackBerry’s chief executive, signalled that his turnround plans for the struggling Canadian smartphone maker were on track as the company reported that its fiscal fourth-quarter loss had narrowed to $423m.
The fourth-quarter loss, equivalent to 80 cents per share, came as revenues fell by 64 per cent to $976m, below Wall Street expectations, but Mr Chen said he was “very pleased” with the company’s progress.
The loss compares with a profit of $98m or 19 cents per share a year ago. Excluding several one-time items, BlackBerry reported an adjusted loss from continuing operations of $42m, or eight cents per share, for the quarter. Wall Street analysts had forecast an adjusted loss of 55 cents a share on revenues of $1.11bn.
The latest quarterly loss brought the company’s full year loss to $5.9bn, but Mr Chen’s upbeat comments and a smaller than expected operating loss in the latest period helped ease investor concerns. BlackBerry stock rose after the results were announced before settling back to trade around $9 at lunchtime, little changed from the Thursday close.
Mr Chen, who took over as chief executive in November after Fairfax Financial, the company’s biggest shareholder, led a rescue refinancing after a failed buyout bid, reiterated that BlackBerry is on track to reach break-even cash flows by the end of the current 2015 fiscal year.
“I am very pleased with our progress and execution in fiscal Q4 against the strategy we laid out three months ago. We have significantly streamlined operations, allowing us to reach our expense reduction target one quarter ahead of schedule,” he said. “BlackBerry is on sounder financial footing today with a path to returning to growth and profitability.”
The company said end users purchased 3.4m BlackBerry smartphones in the last quarter, but a majority of these sales were of handsets that had already been sold to telecom operators and other “channel partners”. The company recognised the sale of just 1.3m handsets in the quarter compared with Wall Street forecasts of 1.8m.
Of the BlackBerry smartphones sold through to end customers in the fourth quarter, the majority, about 2.3m, were older BlackBerry 7 devices as customers continued to shun the latest phones based on its BlackBerry 10 operating system.
BlackBerry ended the period with $2.7bn in cash, cash equivalents, short-term and long-term investments, compared with $3.2bn at the end of the previous quarter.
The company has seen its handset sales and market share plunge in recent years as customers defected to rivals including Apple and Samsung. It recently began experimenting with selling virtual goods, such as emoticons and cartoon hearts to users of its BBM messaging service, which until now has been prized more for its strong security than cutesy cartoon features.
As part of his turnround strategy, Mr Chen has negotiated a handset manufacturing partnership with Taiwan’s Foxconn Technology group. The first handset to emerge from that partnership has been dubbed “Jakarta” and will go on sale in Indonesia later in the current quarter.
Meanwhile Mr Chen is hoping a renewed focus on software and services, and on its QNX embedded software unit that dominates the market for car operating systems, will help the company turnround. During the latest quarter, about 37 per cent of Blackberry’s revenues came from hardware, 56 per cent from services and 7 per cent from software and other sources.
However, on a conference call with analysts, he emphasised again that BlackBerry is not abandoning the handset business and noted that earlier this week its BlackBerry 10 smartphones earned the coveted “full operational capability” designation from the US Defense Department.
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