BlackBerry CEO confirms Android smartphone and fiscal Q2 GAAP profit

BlackBerry CEO John Chen said the pending launch of the company's first Android smartphone forms part of an effort to accelerate a return to profitability at the company's hardware division.

Chen said the forthcoming Priv smartphone offers a unique combination of security -- long a key selling point for BlackBerry smartphones -- with the broad apps ecosystem of Google's Android operating system. The CEO is banking on the new device to boost hardware sales, which remain BlackBerry's key revenue generator accounting for 41 per cent of sales in its fiscal second quarter 2016, which covers the three months to end-August.

In the company's earnings statement, Chen also said BlackBerry is "investing strategically" in its software licensing business. Those investments cover organic growth "through new products and services based on the BES platform, and through acquisitions like AtHoc and Good," Chen stated.

Chen said the efforts in hardware and software licensing should lead to "modest sequential revenue growth in each of the remaining quarters of fiscal 2016."

BlackBerry also expects to generate positive free cash flow in its second half, and set itself the target of achieving sustainable non-GAAP profitability in its fiscal fourth quarter 2016.

GAAP figures show the company generated a net income of $51 million (€45.5 million) during its fiscal second quarter, a significant turnaround from the $207 million loss recorded in the same period of 2014. However, the second quarter profit is down slightly on the $68 million profit BlackBerry made in its fiscal first quarter 2016, while non-GAAP figures show the company made a loss of $66 million in the recent period.

Total revenues were also down sequentially, from $658 million in the opening quarter of fiscal 2016 to $490 million in the recent period, based on GAAP standards.

The company's share price fell on Friday, when the results were revealed, as BlackBerry announced a non-GAAP loss of $0.13 per share, which Bloomberg reported was higher than analysts had expected.

Analysts with Bloomberg Intelligence told the news agency that BlackBerry's device business is still struggling, after shipping 800,000 units during the fiscal second quarter.

However, while low, the analysts said the shipments show that BlackBerry's hardware business is "not dead yet", but is definitely in "bad shape."

For more:
- see BlackBerry's earnings statement (PDF)
- view this Bloomberg article

Related articles:
BlackBerry's software revenue in focus for earnings as new photo of Android phone leaks
BlackBerry to buy Good Technology for $425M, combining #2 and 3 vendors in enterprise mobility management
BlackBerry chief pledges to stem revenue declines; seeks boost from software business
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