Thursday, 3 April 2014 00:00
-
- {{hitsCtrl.values.hits}}
Reuters: BlackBerry Ltd. reported a smaller-than-expected loss on Friday as new Chief Executive John Chen slashed costs, but a 64% drop in revenue underscored the challenge Chen faces in turning around the struggling smartphone maker.
The Canadian company, which has lost most of the smartphone market to Apple Inc’s iPhone and gadgets powered by Google Inc’s Android operating system, has laid off thousands and agreed to sell most of its real estate.
Chen said he expects to be cash flow positive or neutral by the end of the current fiscal year, which runs to early March 2015. He does not expect to turn a profit until sometime in the following fiscal year. At a round table with media, Chen said he also does not expect revenue growth until some time that fiscal year.
“John Chen did what John Chen is known for. He came in and he’s cut the cost base,” said BGC Partners technology analyst Colin Gillis, who noted the company’s “precipitous” revenue drop. “He’s buying himself some time.”
Research and development expenses fell 24% in the fourth quarter from a year earlier, while selling, marketing and administration costs dropped 35%.
BlackBerry’s market share of the global smartphone market was below 1% at the end of 2013.
Under Chen, the Waterloo, Ontario-based company is focusing on its services arm, which manages mobile devices on the internal networks of big clients.
The company’s newer BlackBerry 10 phones have not lived up to high expectations, and after heavily promoting several devices with touch-screen keyboards, it is returning to its roots, emphasizing the physical keyboards its most loyal fans covet.
Last month BlackBerry unveiled a new “classic” model with a keyboard. Chen told Reuters in an interview that BlackBerry was designing three new keyboard-centric devices and would probably introduce them in the next 18 months.
Chen said the company was set to begin a new production run of its Bold devices that run on the older BlackBerry 7 platform as demand for them remains strong.
The company said it had recognised hardware revenue on about 1.3 million BlackBerry smartphones during the fourth quarter, compared with about 1.9 million devices in the third quarter.
It also said about 3.4 million devices were sold through to end customers, and this included shipments made and recognised before the fourth quarter. The company said 68% of these devices were BlackBerry 7.
Its net loss was $423 million, or 80 cents a share, for the fourth quarter ended March 1. That compared with a year-earlier profit of $98 million, or 19 cents a share.
Revenue fell to $976 million from $2.68 billion. Analysts on average had expected $1.11 billion, according to Thomson Reuters I/B/E/S.
