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Monday, March 18, 2024
March 18, 2024

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BlackBerry earns surprise profit as sales fall

The Columbian
Published:

TORONTO — BlackBerry Ltd. reported a surprise fourth-quarter profit Friday after cutting costs and increasing the average price of its smartphones amid slumping sales.

Excluding some items, the profit was 4 cents a share in the period ended Feb. 28, the Waterloo, Ontario-based company said in a statement. Analysts had projected a loss of 4 cents a share, the average of 27 estimates compiled by Bloomberg. Sales came in short at $660 million, a 32 percent decline from a year earlier.

The former leading smartphone maker, whose global market share has fallen to less than 1 percent, is still relying on phones to ease its transition to providing software and services to professionals. Since September, the company has unveiled three new models — the Leap, the Passport and the Classic — and plans more this year.

Shares rose 4.2 percent to $9.69 at 9:30 a.m. in New York. They had fallen 14 percent this month through Wednesday as analysts from Morgan Stanley and Rosenblatt raised concerns about low demand for the new phones.

BlackBerry is in the midst of a turnaround undertaken after Chief Executive Officer John Chen took over in November 2013. It opened its device-management service to non-BlackBerry phones, and is expanding software offerings and applications for business customers using iPhones, iPads or Android devices. Last year, BlackBerry also bought Secusmart, a provider of anti-eavesdropping technology, to attract customers demanding rigorous data security.

Revenue from devices still accounted for 42 percent of sales during the quarter. About 1.6 million BlackBerry smartphones were sold to customers, at an average price of $211, compared with $180 in the previous quarter.

Software revenue made up just 10 percent of the total at $67 million, up 20 percent from a year earlier. For the full fiscal year, software revenue was $234 million, a number Chen plans to boost to $600 million by March 2016. Revenue will ramp up in two or three quarters after the sales force increases and distribution improves, Chen said on a conference call.

“Today, the morale at the company is a lot better than a year ago,” Chen said. “It probably still has to be a lot better than today.”

Last month, BlackBerry began charging customers who had upgraded to its latest device-management software, known as BES12, under a free program. The company hasn’t gotten any negative feedback on BES12, Chen said on the call, addressing concerns raised by analysts about a possible slowdown in demand.

BlackBerry cut costs such as research and development, with total operating expenses at $424 million, down more than 60 percent from a year earlier.

The company also announced a deal that lets China Mobile Ltd.’s Hong Kong unit simplify the way it bills customers using BlackBerry’s device management software. The company announced similar agreements with other carriers, including Vodafone Group’s Indian unit and Telekom Slovenia, this month.

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