It seems that BlackBerry has turned the corner as it reported a quarterly profit today – results that sent its share price up by over five percent.
Revenues however fell to $550 million for its quarter, down from $793 million in the same period last year. Net profit was £28 million, compared to a loss in the same quarter last year of $148 million.
So what’s BlackBerry doing right? It seems that CEO John Chen is keeping a close eye on expenses but its revenue from software rose 20 percent in the quarter, accounting for $67 million in revenues.
Despite its formerly impregnable position as the handheld of choice for the corporate market, sales of its more up to date models don’t appear to be particularly good.
BlackBerry is attempting to change its model from hardware and services to software.
Wall Street analysts hailed the profit figure but fretted about the revenue, which the company had estimated would be $786 million.
Chinese telecom gear maker Lenovo is in talks to buy Lenovo and is expected to offer the company $15 a share later this week.
Lenovo and BlackBerry refused to comment and this is not the first time that the two have been rumoured to be involved in a tie up.
Senior Lenovo executives have indicated an interest in BlackBerry as a means to strengthen their own handset business. Last year, when BlackBerry said was exploring strategic alternatives, Lenovo was named as an obvious buyer.
The Canadian government put the brakes on any deal when it announced that any sale to Lenovo would not win the necessary regulatory approvals due to security concerns. At the time, the Canadian government had swallowed the US Cool aid which stated that Chinese companies were turning over data to their government through secret spyware. In fact, US companies were turning over data to their government.
BlackBerry’s secure networks manage the email traffic of thousands of large corporate customers, along with government and military agencies across the globe. Under Canadian law, any foreign takeover of BlackBerry would require government approval under the Industry Canada Act.
Analysts also say any sale to Lenovo would face regulatory obstacles, but they have suggested that a sale of just BlackBerry’s handset business and not its core network infrastructure might just sneak past the regulators.
BlackBerry was believed to want to off-load its handset business, even as the arm turned a profit before special items in the last quarter.
BlackBerry chief executive officer John Chen has said in the past he sees the handset business as core to the company for now, as it will foster sales growth over the next few quarters until the software and services business begins to generate new revenue streams in the first half of 2015.
Blackberry lost two percent of revenue in its fourth quarter of fiscal 2013, down $49 million, and a massive 36 percent drop from $4.2 billion year on year. However, it forecasts breaking even for the next quarter and a mobile analyst has told us the company should be financially viable for some time to come.
For the quarter, hardware accounted for 61 percent of the revenue, 36 percent for service and three percent for software and other revenue. It shipped six million Blackberry smartphones and roughly 370,000 Playbook tablets.
One half of the two-headed dragon that founded and used to run the company, Mike Lazaridis, will be leaving the company.
For its outlook, Blackberry said it will be increasing marketing spend for Q1 of fiscal 2014 to support Blackberry 10. This is a planned 50 percent increase in marketing, and the firm thinks it will be near breaking even, citing lower cost base, a more efficient supply chain and better hardware margins.
Jim Dawson, analyst at Ovum, told ChannelEye that every other company that’s suffered a severe drop in device revenues has struggled because cust cotting at a rapid rate is difficult. “Blackberry appears to have done a great job executing on its CORE strategy which includes reducing costs, and has managed to bring costs down significantly,” Dawson said. “As such, it was profitable this past quarter and should break even next quarter”.
“Given its good cash balance and lack of debt, it should be financially viable for quite some time at this rate, so I’m not overly concerned about the drop in revenues,” Dawson said. “I’m more concerned about the drop in subscribers, which is a longer-term indicator that it’s losing customers faster than it can win new ones”.
UK retailers have rubbished claims by the mobile phone maker formerly known as RIM that its white Blackberry has sold out.
BlackBerry boss Thorsten Heins buzzed enthusiastically that the BlackBerry Z10 white model is completely out of stock after only being launched last week.
While retailers have said that the BlackBerry Z10 has seen an exceptional first sales week it was not quite what BlackBerry CEO Thorsten Heins painted, when he claimed that the white version was sold out already and the black was hard to stock up again.
Mobile retailer Phones 4u has confirmed that while over 55 percent of its 680 stores sold out of the BlackBerry Z10 over the launch weekend, the lighter hued handset is, unlike Heins’ comments suggested, still available.
In fact Trusted Reviews said that if you are prepared to do the leg work you can easily find one. In the UK London-based Phones 4u outlets are the exclusive supplier for the white BlackBerry Z10.
Oxford Street has both colours and was telling worried punters that they did not have to run to pick one up as they had shedloads out the back.
Regent Street only had the white BlackBerry Z10 left.
Heins does need the Z10 to be a success, but does seem to be overestimating how well it is doing. Analysts claiming Heins is attempting to boost the hype surrounding the new device, particularly as many of them think that the phone is too little too late to save RIM, er Blackberry.
Scott Hooton, Chief Commercial Officer at Phones 4u said that while a few stores did sell out of the Blackberry Z10 on launch weekend, but the outfit replenished its stock within hours.