BlackBerry posts fresh losses, but sees upside

BlackBerry posts fresh losses, but sees upside
Updated today at 06:26 AM
OTTAWA (AFP) - BlackBerry reported fresh losses on Friday but offered some reasons for optimism as the smartphone maker struggles to escape from a death spiral.

The Canadian firm reported a loss of US$423 million (S$530 million) in the fourth quarter of its 2014 fiscal year, as revenues sank.

Revenues fell to US$976 million in the fourth quarter - down from US$2.7 billion 12 months earlier. Sales of smartphones fell from 1.9 million to 1.3 million, the company said.

"I am very pleased with our progress and execution in the fiscal fourth quarter against the strategy we laid out three months ago," said chief executive John Chen, who took the reins in November as the company sought to revive its fortunes.

"We have significantly streamlined operations, allowing us to reach our expense reduction target one quarter ahead of schedule. BlackBerry is on sounder financial footing today with a path to returning to growth and profitability." The company said it is targeting "break even cash flow results by the end of fiscal 2015," which began this month.

It said it delivered some 3.4 million smartphones in the quarter, but 2.3 million were the older models using its BlackBerry 7 operating system.

BlackBerry shares opened with a jump of 5.5 per cent at US$9.55, as some investors saw signs of a turnaround. But by the close of trading its share price had slumped 7.07 per cent to US$8.41.

Paul Ausick at 24/7 Wall Street said the results "only look good because they're not awful." Mark Sue at RBC Capital Markets said in a research note that revenues were below estimates but that the company was showing better signs toward profitability and a "mix shift toward services versus hardware". Its falling subscriber base is most worrying, according to Brian Modoff at Deutsche Bank, warning that it is "not showing signs of a bottom". Analyst Ehud Gelblum at Citi, meanwhile, said BlackBerry may be worth more than its current valuation "from a sum-of-parts perspective", suggesting that a breakup or sale is still possible.

"Blackberry has significant cash on hand, and potentially valuable side businesses that may be worth more outside the company," he said in a research note.

Last year, the company introduced the BlackBerry 10 operating system in an effort to regain ground lost to rivals such as Apple and others using the Google Android operating system.

In December, BlackBerry unveiled a manufacturing partnership with Taiwan-based Foxconn and a revamped organisational structure. The deal transfers to Foxconn the manufacturer and inventory management and allows BlackBerry to focus on software and services.

The company also announced in 2013 it was slashing some 4,500 jobs, or 40 per cent of its workforce, as part of the restructuring.

BlackBerry at one point last year put itself up for sale, but later abandoned hopes of finding a buyer, and instead pegged its future on a US$1 billion cash infusion.

The revenue breakdown for the fourth quarter was 37 per cent for hardware, 56 per cent for services and seven per cent for software and other revenue.

The loss for the fiscal year ending March 1 amounted to US$5.9 billion, a huge increase from the loss of US$646 million a year earlier. Revenues, meanwhile, slumped nearly 40 per cent for the full year to US$6.8 billion.