Hello, Blackberry is calling.....
Tech Idea Updates: Smartphone news
RIM, maker of Blackberry, announced a surprise profit but the company is still on life support. See chart. Once an enterprise favorite, RIM continues to see its sales slides and is struggling to regain market share. Wall Street Journal. Or see below.
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| Happy Days for John Chen, RIM CEO |
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From Wall Street Journal
BlackBerry Posts Surprise Small Profit, but Revenue Falls
Smartphone
Maker Lowers Expenses, but Sales Remain Under Pressure
By Ben Dummett
Updated June 19, 2014 5:05 p.m. ET
BlackBerry gave early indications that its effort to reignite revenue by selling new smartphones, software and security services to corporate and business customers is working even as it continues to slash costs.
The company is "at the tail end of its cost-cutting" effort and is now working to boost revenue, Mr. Chen said on the company's earnings call. In the fiscal first quarter, ended May 31, the company reduced its adjusted operating expenses by 57% from a year ago and 13% from the fourth quarter. That helped the company generate an unexpected profit of $23 million for the period, well ahead of the $423 million loss it posted three months ago and its year-earlier loss of $84 million.
The Waterloo, Ontario company said sales of its newly launched low-cost Z3 smartphone are exceeding expectations, and said its plans to launch other devices later this year remain on schedule. Meanwhile, some enterprise customers are showing renewed interest in the BlackBerry technology that companies use to manage or oversee phones issued to employees, Mr. Chen said.
Still, the CEO remained cautious, as the company's revenue remains under pressure and isn't expected to start growing for months. "There's still a lot of work to do," Mr. Chen told shareholders at the company's annual meeting in Waterloo. "Will we get back to the iconic state [BlackBerry once held]? I don't know, but we will try."
BlackBerry's shares gained 9.7% to $9.09 in New York Stock Exchange Trading on Thursday.
"We were expecting incremental baby steps and that's what the results reflect," Ramon Llamas, an analyst at research firm International Data Corp., said. "But it's still going to be a long slog" for the turnaround plan to succeed, he said.
Blackberry's history of falling short of expectations helped trigger a management shake-up and led to Mr. Chen's appointment in November. The company had faced mounting losses since its 2013 bet on a series of new phones and an operating system called BB10 fell flat against competition from Apple Inc., Samsung Electronics Co. and other device makers.
To stem this tide, Mr. Chen has focused on both cost-cutting and finding new sources of revenue to turn around the company. But that remains a challenge as the company's first-quarter revenue fell 69% to $966 million.
The company said its cash position improved, rising to $3.1 billion at the end of the quarter from $2.7 billion three months earlier, helped by proceeds from previously announced real-estate sales and a tax refund. Mr. Chen said the company continues to target break-even cash flow by the end of its current fiscal year.
BlackBerry said its first-quarter revenue breakdown was about 39% for hardware, 54% for services and 7% for software and other sources.
In the first quarter, BlackBerry said it sold about 2.6 million phones, down from the 3.4 million it sold in the prior period. On its conference call, BlackBerry said 65% of the devices sold in the latest quarter were BB10 phones, while the rest were legacy BB7 devices.
Mr. Chen is betting on the introduction of new devices aimed at emerging markets where BlackBerry remains a relatively popular brand, and on its traditional government and corporate customer base, to regain market share.
In May, BlackBerry launched the Z3 in Indonesia, a device priced under $200 and targeted at emerging markets. This week, BlackBerry launched the phone in Vietnam and plans to do the same in the coming weeks India.
Ultimately the Z3 will be available in a total of nine countries. The company originally projected it would sell a total of a million devices over their life, but Mr. Chen now said he thinks sales will exceed that level based on their performance in Indonesia. He declined to provide initial sales figures.
BlackBerry also plans to launch a new phone, called Passport, in London this September. The new phone, which has a square face, is larger than the company's current offerings. "I call it either the world's smallest phablet or the world's biggest phone," Mr. Chen said as he displayed it for shareholders.
BlackBerry is also catering to fans of its keyboard and email services with the launch of the Classic, which is expected toward the end of this year.
Meanwhile, in a bid to regain enterprise customers, BlackBerry is upgrading its device-management software technology, which handles security and software for smartphones that a company issues to or oversees for its employees. In this field, the company competes against major players such as International Business Machines Corp. and Citrix Systems Inc.
The company plans to introduce the latest version of its device-management software near the end of this year and is now offering enticements that make it easier for customers to switch to BlackBerry's current offering and then upgrade to the new version when it is released.
Deepak Kaushal, analyst at GMP Securities Ltd., said the results show that BlackBerry's management team has stemmed the company's bleeding – for now. "What they've earned is a pause before they launch new hardware and services later this year, but the challenge remains tough," said Mr. Kaushal. "I think the real question mark is their subscribers. If they can't create subscribers, they've got more restructuring to go through."
—Judy McKinnon and David George-Cosh contributed to this article.
Write to Ben Dummett at ben.dummett@wsj.com
