March 29, 2013-BlackBerry on Thursday reported better-than-expected quarterly results on Thursday, returning to profit in its fourth quarter. In the process, the company reported sales of a million units of its latest touch smartphone, the Z10.
The earnings provide a first glimpse of how BlackBerry’s new touch-screen Z10 is selling internationally and in Canada since its debut on January 31. The 1 million Z10 phones were above the 915,000 that analysts had been expecting.
Details on the US launch are not part of the fourth quarter financial results because the Z10 just went on sale in the US last week. In the quarter that ended March 2, BlackBerry earned $98 million, or 19 cents a share, compared with a loss of $125 million, or 24 cents a share, a year earlier. After adjusting for restructuring and other one-time items, RIM earned 22 cents a share.
Revenue fell 36 per cent to $2.7 billion, from $4.2 billion.
Bill Kreyer, a tech analyst for Edward Jones, called the decline “pretty alarming. This is going to take a couple of quarters to really see how they are doing,” Kreyer said.
BlackBerry CEO Thorsten Heins said he implemented numerous changes at the company over the past year and those changes have resulted in BlackBerry returning to profitability.
BlackBerry reported gross margins of 40 per cent, up from 34 per cent a year earlier. The company credited higher average selling prices and higher margins for devices.
“I thought they were dead. This is a huge turnaround,” Jefferies analyst Peter Misek said from New York. Misek said the Canadian company “demolished” the numbers, especially its gross margins. “This is a really, really good result,” he said. “It’s off to a good start.”
Despite the BlackBerry 10 sales, RIM lost about 3 million subscribers to end the quarter with 76 million.
The BlackBerry, pioneered in 1999, had been the dominant smartphone for on-the-go business people and other consumers before the iPhone debuted in 2007 and showed that phones can handle much more than email and phone calls.
Even as the BlackBerry has fallen behind rivals in recent years, many users have stayed loyal because they prefer a physical keyboard over the touch screen on the iPhone and most Android devices.
The new BlackBerry Z10 has received favorable reviews since its release, but the launch in the critical US market was delayed until late this month. A new keyboard BlackBerry, called the Q10, won’t be released in the US for two or three more months.
The delay in selling the Q10 complicates RIM’s efforts to hang on to customers tempted by the iPhone and a range of devices running Google Inc’s Android operating system.
RIM, which is changing is formal name to BlackBerry, said it expects to break even in the current quarter despite increasing spending on marketing.
“To say it was a very challenging environment to deliver improved financial results could well be the understatement of the year,” Heins said during a conference call with analysts.
The company also announced that co-founder Mike Lazaridis will retire as vice chairman and director.
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