BlackBerry Reports Bigger-Than-Expected Loss, Surprises No One
BlackBerry (NASDAQ:BBRY) reported earnings on Friday morning, posting results that showed even wider losses than analysts had expected, though no one was particularly surprised. While new CEO John Chen remains as positive and motivated as ever about the prospects of the smartphone maker’s turnaround, the company still clearly has a long way to go before returning to profitability.
BlackBerry reported a loss of 80 cents per share, versus 18 cents a year ago, while analysts had expected the figure to be around 55 cents. Revenue came in at $976 million, an 18 percent drop from the previous quarter and a whopping 64 percent drop year-over-year. Analysts had expected revenue to be around $1.1 billion. BlackBerry said that during the quarter it saw hardware revenue from 1.3 million smartphones, versus 1.9 million in the previous quarter, and sold a total of 3.4 million devices. The company said its cash and investments totaled $2.7 billion as of the end of the fourth quarter.
For the full fiscal year, BlackBerry’s revenue was down 38 percent versus the previous year, to $6.8 billion. The company’s loss for the year came in at $5.9 billion, or $11.18 per share, versus a loss of just $628 million in the previous year.
“I am very pleased with our growth and execution in fiscal Q4 against the strategy we laid out three months ago. We have significantly streamlined operations, allowing us to reach our expense reduction target one quarter ahead of schedule,” Chen said in the company’s earnings release. “BlackBerry is on sounder financial footing today with a path to returning to growth and profitability.”
The results weren’t very surprising even if they did reflect wider losses than expected, as BlackBerry has had a tumultuous year. The company announced plans to sell itself late last summer, then abruptly abandoned those plans, fired then-CEO Thorsten Heins, and hired Chen to initiate a massive turnaround effort. Chen’s plans include moving away from consumer smartphones, an area where BlackBerry has proven itself unable to compete against industry titans Apple (NASDAQ:AAPL) and Samsung (SSNLF.PK), toward business customers and enterprise services.
The company received some good news for its enterprise division on Thursday, announcing that its BlackBerry 10 operating system had received security clearance to operate on U.S. Defense Department networks. BlackBerry is currently the only mobile solutions provider to achieve fully operational capacity, the highest level of security clearance. Department of Defense employees with a BlackBerry 10 smartphone will be able to access government data, email, apps, and other resources via the U.S. Defense Information Systems Agency networks.
More importantly, on Wednesday, the company’s Secure Work Space enterprise offering also received high-level clearance for use in separating the business from the personal with smartphones running on Apple’s iOS operating system as well as Google’s (NASDAQ:GOOG) Android, the two most popular operating systems. Enterprise Service 10 for iOS and Android now has Federal Information Processing Standard (FIPS) 140-2 certification.
Both of these government clearances will make BlackBerry’s enterprise systems more appealing to government organizations and corporate customers looking to achieve the highest level of security available. The fact that the Secure Work Space system is compatible with other smartphone brands makes it that much more appealing.
Of course, such a large turnaround hasn’t been without its share of drama. Many executives have left the company over the past few months. Most recently, earlier this week BlackBerry won a lawsuit preventing one of its executives from taking a job at Apple before six months had passed from his leaving BlackBerry, Canadian paper The Globe and Mail reported. Former Executive Vice President Sebastien Marineau-Mes was found to be in violation of a contract he signed even though he never began work for the position the contract pertained to, and was barred by an Ontario court from starting at Apple until June 23.
BlackBerry stock was trading up more than 5 percent on Friday morning, as investors weren’t surprised by the large losses it faced last quarter and instead focused on the enterprise deals.
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