Shares of BlackBerry plunged nearly 9 percent this morning after the company posted unexpectedly low revenues in its fiscal fourth quarter. The company said it shipped 600,000 phones in the quarter, well below expectations.
The results again underscore the possibility that BlackBerry could exit the smartphone market -- a market that the company dominated just a few years ago.
BlackBerry reported quarterly revenue of $464 million, down from $660 million during the same period a year ago and well shy of the $563.2 million analysts expected, according to Thomson Reuters I/B/E/S.
The shortfall was almost entirely due to disappointing device sales, according to a research note from Wells Fargo Securities. Software sales and service revenues were in line with Wells Fargo estimates, the analysts said, but reported hardware revenues of $190 million were short of Wells Fargo's forecast of $280 million.
Wells Fargo said earlier this week it expected BlackBerry to report shipping roughly 850,000 Priv smartphones during the quarter, which the firm said would push the vendor's overall quarterly revenues to around $571 million.
But BlackBerry CEO John Chen said during a conference call that Priv sales weren't meeting his expectations, according to Bloomberg.
"People do like our Priv, but there's a much more limited audience and that segment seems to be saturated at the moment," Chen said. "The number-one goal that the company has is to continue to ramp up software and services."
Cnet noted BlackBerry shipped 600,000 phones during the quarter, lower than the 700,000 it shipped in the preceding quarter. Distribution of the Priv is clearly a challenge: Chen had hoped to ship the phone in fully 31 countries by now, but said today he's now working to sell the phone in just six countries. In the United States, AT&T and T-Mobile sell the Priv, and Verizon just added it to its lineup this month. Sprint doesn't sell the phone.
Indeed, while the Priv clearly marks a new strategic direction for the once-dominant smartphone manufacturer, Chen continued to emphasize BlackBerry's gains in software, services and licensing.
"Overall, BlackBerry's Q4 performance was solid as we made progress on the key elements of our strategy, which are go grow software faster than the mobility software market, achieve device profitability and generate positive free cash flow," Chen said in a press release. "We have clearly gained traction and market share in enterprise software. We more than doubled our software and licensing revenue in Q4 and exceeded our target of $500 million for the full year."
The Priv runs Google's Android system rather than BlackBerry's proprietary OS. BlackBerry hopes to leverage Android's dominant global footprint by touting the privacy and security features it offers on the device.
Wells Fargo echoed those thoughts, saying that "while its security, QNX and Internet of Things revenue are growing, visibility to its new product demand is still low."
"This quarter or the next could determine if BlackBerry remains a hardware vendor," Current Analysis analyst Avi Greengart told Cnet.
Shares of BlackBerry were down 8.8 percent to $7.38 in late-morning trading Friday.
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