BlackBerry’s Loss Narrows, Tops Estimates Amid Turnaround

By Gerrit De Vynck

BlackBerry Ltd. (BBRY) reported a smaller second-quarter loss than analysts expected, as Chief Executive Officer John Chen proves that his turnaround is gaining momentum.
BlackBerry’s net loss narrowed to 2 cents a share, excluding one-time items, in the quarter that ended Aug. 30, the Waterloo, Ontario-based company said today in a statement. That’s better than the 16-cent deficit projected by analysts, according to the average of estimates compiled by Bloomberg.
The narrower-than-expected loss was bolstered by cost cuts and stabilizing smartphone sales. Chen has also sworn off the consumer handset market and
instead concentrated the company’s smartphone efforts on business professionals with the introduction of the square-screen Passport phone this week. It’s all part of his plan to return to profit next fiscal year.
“Our workforce restructuring is now complete, and we are focusing on revenue growth with judicious investments to further our leadership position in enterprise mobility and security,” Chen said in the statement.
Revenue fell to $916 million in the quarter, short of the $949.8 million estimated by analysts.
Since Chen took over in November, he has sold real estate, outsourced manufacturing and worked to expand revenue from business services and the BBM instant messaging service.

Photographer: Hannah Yoon/Bloomberg

Since BlackBerry Ltd. Chief Executive Officer John Chen took over in November, he has... Read More

The company said it still plans to reach break-even cash flow by the end of this fiscal year. BlackBerry ended the quarter with $3.1 billion in cash, including short-term and long-term investments.

Preserving Cash

The Canadian company used $36 million of cash in the fiscal second quarter, compared with $255 million in the first quarter. That was better than the estimate from Mark Sue, an analyst at RBC Capital Markets, for operating cash burn of $145 million.
The shares rose 4.1 percent to $10.20 at 7:38 a.m. New York time in early trading. Yesterday, the stock fell 6.8 percent to $9.80, giving BlackBerry a market value of $5.2 billion.
With the focus on enterprise, BlackBerry is pushing ahead with devices like the Passport that cater specifically to that audience, shunning the more consumer-oriented devices like Apple Inc.’s larger iPhone 6 Plus designed for video consumption. The square-screened Passport is designed for business users who write e-mails, study spreadsheets and read documents on their phones.

Phone Shipments

About 2.4 million BlackBerry smartphones were sold to customers in the quarter, and the company recognized hardware revenue on about 2.1 million of them.
That compares with revenue from 1.6 million smartphones in the first quarter and about 2.6 million sold to customers. The company’s market share was down to 0.5 percent globally, as of the three months that ended in June, according to research firm IDC.
The company posted a net loss of $207 million, or 39 cents a share, in the fiscal second quarter, compared with a loss of $965 million, or $1.84, a year ago.
BlackBerry said the number of enterprise licenses it sold in the quarter tripled to 3.4 million from last quarter through a promotional offer. A quarter of those were customers who switched from competitors’ systems, according to the statement.
BBM’s active monthly users rose to 91 million, up from 85 million in the prior quarter.
(BlackBerry is holding a conference call at 8 a.m. New York time. The call can be accessed on the Internet here.)