BlackBerry's finances better than expected, schedules Passport phone launch for September
BlackBerry (NASDAQ:BBRY) posted quarterly financial results better than what some analysts had expected, pushing the company's stock up almost 14 percent in Wall Street trading this morning to around $9.43 per share. Further, the company said it recognized hardware revenue on 1.6 million BlackBerry smartphones in the quarter, up from 1.3 million in the previous quarter.
Although the results remain far below what BlackBerry enjoyed in its heyday several years ago, when the company was the world's leading smartphone vendor, they nonetheless indicate progress on the company's turnaround efforts.
"Over the past six months, we have focused on improving efficiency in all aspects of our operations to drive cost reductions and margin improvement. Looking forward, we are focusing on our growth plan to enable our return to profitability," said John Chen, BlackBerry's CEO and executive chairman. During the company's quarterly conference call, Chen said BlackBerry is at "the tail end of its cost-cutting," according to the Wall Street Journal.
Chen also said BlackBerry would launch a new phone called Passport at an event in London in September. Chen didn't offer any other details, though the publication CrackBerry noted the device likely will be wider than previous Blackberry smartphones and will sport a physical keyboard.
Chen replaced BlackBerry's previous CEO, Thorsten Heins, last year as an attempt to return the company to its enterprise roots after BlackBerry failed to take its BlackBerry 10 smartphones into the wider consumer mass market. During his first six months at BlackBerry, Chen has dramatically dialed down BlackBerry's handset ambitions and has worked to shore up its position among business executives as a vendor of mobile device management and security products. Indeed, Chen today pointed to the company's recent EZ Pass Program successes; he said the company issued 1.2 million licenses for its BES10 enterprise device management product through the EZ Pass program in the quarter.
Chen's emphasis on efficiency is reflected in BlackBerry's results in its fiscal first quarter: The company reported revenue of $966 million, down just 1 percent from the previous quarter. Analysts at Wells Fargo noted those results were above their expectations. BlackBerry also reported a net income of $23 million, a dramatic reversal from the $423 million loss it reported in the previous quarter. BlackBerry's net income improvements were largely a result of accounting changes, but nonetheless indicate progress on its finances. Importantly, BlackBerry reiterated its goal of reaching break-even cash flow by the end of its fiscal 2015.
BlackBerry's Chen recently gave the company an 80 percent chance of turning its business around--higher than the 50-50 odds he offered in March.
As for BlackBerry's phone sales, the company said it recorded fully 2.6 million BlackBerry smartphones sold in the quarter, "which included shipments made and recognized prior to the first quarter and which reduced the company's inventory in channel." That figure is down from 3.4 million BlackBerry phones sold in the previous quarter. According to the WSJ, BlackBerry sold 1.69 million BB10 phones in its most recent quarter.
And it appears BlackBerry hopes to grow its smartphone sales: The company just yesterday announced a deal to gain access to the 240,000 apps and games in Amazon's (NASDAQ: AMZN) Appstore, greatly expanding the number of apps BlackBerry 10 customers can use. That announcement dropped hours before Amazon announced its new Fire smartphone.
In evaluating BlackBerry's quarterly performance, analysts at Wells Fargo said that BlackBerry's cash flow and service sales came in above expectations, and that the company showed progress on smartphone and BES10 sales. However, they said that BlackBerry's hardware sales were below expectations, and that its North American sales were "trending down on a sequential basis."
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