BlackBerry sells 2.3M BB 7 devices, and just 1.1M BB10 phones, but CEO remains upbeat

BlackBerry (NASDAQ:BBRY) CEO John Chen said he is feeling good about the company's turnaround prospects despite continued financial losses, sagging revenues and weaker smartphone shipments.

BlackBerry reported a smaller net loss for its fiscal fourth quarter than analysts had been expecting, largely due to cost-cutting measures Chen has put in place since taking the helm in November. In December BlackBerry forged a five-year manufacturing deal with Foxconn for the contract manufacturer to jointly develop and manufacture some of BlackBerry's new lower-end devices and manage the inventory associated with those devices.

For its latest quarter BlackBerry posted a net loss of $423 million, which was less than analysts had expected, according to Bloomberg. It's also down from the massive $4.4 billion loss BlackBerry took in its fiscal third quarter and compares to a net profit of $98 million in the year-ago period. The company took major restructuring charges in its fiscal third quarter, which weighed down its results. On an adjusted basis, or excluding one-time items, the firm reported a loss of $42 million for its latest quarter.

"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," Chen said. "BlackBerry is on sounder financial footing today with a path to returning to growth and profitability."

During the company's earnings conference call, he said he was "pleased the company is back in execution mode," according to CNET.

However, likely as a result of continued weak BlackBerry smartphone sales, total revenue for the fiscal fourth quarter came in at just $976 million, slumping 18 percent from $1.2 billion in the fiscal third quarter and down 64 percent from $2.7 billion in the year-ago quarter.

During the fiscal fourth quarter, BlackBerry sold around 3.4 million smartphones to end customers, but 2.3 million were older BlackBerry 7 devices and just 1.1 million were newer BlackBerry 10 phones. In its fiscal third quarter, BlackBerry sold 4.3 million BlackBerry smartphones to end customers, and again only 1.1 million were BlackBerry 10 smartphones. Right now, BB10 momentum is clearly stalled.

BlackBerry also burned a lot of cash, going through $553 million during the fiscal fourth quarter, leaving the company with a $2.7 billion reserve.

However, Chen is hoping to change the company's momentum with new devices aimed at corporate executives and enterprise users who still want a phone with a physical keyboard. Chen told Reuters that the company's engineers have designed at least three different next-generation handsets that are being "kicked around right now."

"The focus is going to be very keyboard centric," he said.

In February at the Mobile World Congress trade show, Chen officially unveiled the company's next two BB10 smartphones, a mid-range touchscreen phone called the Z3 and another mid-tier phone with a physical Qwerty keyboard called the Q20. Chen has said the Q20 will come out in the second half of 2014, but did not give a price.

Interestingly, Chen confirmed BlackBerry will continue producing the BlackBerry 7-powered Bold smartphone. Chen said the company inked a deal with contract manufacturer Wistron to continue building the phones. "I'm pleased to formally announce a new production run of the Bold," he said. "We'll support the operating system as long as there is new demand."

Beyond handsets Chen is deeply focused on returning BlackBerry to its enterprise roots and making it the leader in enterprise mobility management software and services for a new generation of smartphones. However, BlackBerry faces fierce competition in the space ranging from IBM and Citrix to VMware and Oracle. 

In February, BlackBerry said its new BlackBerry Enterprise Service 12 will come out before the end of the year, and that in addition to Google's (NASDAQ:GOOG) Android and Apple's (NASDAQ:AAPL) iOS devices, BES 12 will also support Microsoft's (NASDAQ:MSFT) Windows Phone. The BES 12 platform will offer backward and future compatibility, unifying BES 10 and BES 5 on to one platform. To help spur adoption of BES 12, BlackBerry launched an "EZ Pass" program, which will let customers move from BES and other mobile device management platforms to BES 10. 

Chen is also focused on monetizing the BlackBerry Messenger service, or BBM, an effort that could include supporting messaging two and from mobile devices and desktop computers. "We are certainly going to take a very serious look at putting BBM on the desktop," he told Reuters.

For more:
- see this release
- see this Bloomberg article
- see this NYT article
- see this Reuters article
- see this separate Reuters article
- see this CNET article

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