John Chen, chief executive officer of BlackBerry Ltd., holds the BlackBerry Priv smartphone as he speaks during a Bloomberg Television interview at the Asia-Pacific Economic Cooperation (APEC) CEO Summit in Manila, the Philippines, on Tuesday, Nov. 17, 2015. BlackBerry needs to sell five million phones a year before it can start making money, Chen said. Photographer: SeongJoon Cho/Bloomberg *** Local Caption *** John Chen
BlackBerry chief executive John Chen © Bloomberg

BlackBerry shares climbed as much as four per cent even after it reported that revenues slipped by more than a third in its most recent quarter, as the Canadian smartphone company showed signs of progress in its turnround strategy.

BlackBerry has tried to reinvent itself away from its struggling smartphone business, which Apple and Samsung now dominate. Instead John Chen, chief executive, is steering BlackBerry towards making software for governments and business. 

Its software and services unit reported revenues of $166m for the three months ended May — a 21 per cent rise from the same period a year ago. The Ontario-based company said it was on track to deliver on previous guidance of 30 per cent revenue growth in software and services this year. 

BlackBerry broke even for the quarter, adjusting for certain items, results that were less severe than analysts’ predictions of an adjusted loss of 9 cents per share. It projected an adjusted annual loss of 15 cents per share, also smaller than analyst forecasts of 33 cents. 

The company, which at its peak accounted for a fifth of all smartphone sales, reported adjusted revenue of $424m, a 35 per cent drop from the same period a year ago, and missing analysts’ estimates of about $470m. 

Analysts have speculated that BlackBerry will pull the plug on its lossmaking handset business, as sales of its latest phone, the Priv, have been softer than hoped. Priv has been touted as a make-or-break for the company’s handset business as it tries to win back its once-core base of business users. The Priv represented a departure for the company because it was the first BlackBerry to run on the Android platform rather than its own proprietary operating system.

BlackBerry sold about 500,000 smartphones in the quarter, down from 600,000 in the previous quarter, and 700,000 in the quarter before that. Mr Chen said on Wednesday that making handsets profitable was his “number one objective” and that Priv sales had been restricted by its hefty price point. 

BlackBerry last year bought AtHoc, a company that builds emergency alert systems for governments, and Good Technology, a mobile security provider, as part of a pivot to software. 

The company reported a net loss of $670m, compared with a $68m profit in the same period a year ago, weighed down by a $501m impairment charge and a $41m inventory writedown. 

Shares in BlackBerry, which have dropped about 25 per cent this year, lost some of their earlier gains on Wednesday and were up 2 per cent to $6.87 in late-morning trading.

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