Blackberry posts smaller loss than expected on company cost cutting
TORONTO - BlackBerry Ltd., the smartphone maker riding a four-month rally under new boss John Chen, reported a smaller quarterly loss than analysts estimated, helped by production cost-cutting measures he's put in place.
The loss of 8 cents a share excluding one-time charges was better than the 57-cent deficit expected in a Bloomberg survey of analysts. Sales in the fiscal fourth quarter fell 18 percent to $976 million, the Waterloo, Ontario-based company said in a statement Friday, compared with the analysts' average estimate of $1.11 billion.
Chen took over as chief executive officer in November and six weeks later announced a deal with Foxconn Technology Group to outsource production, distribution and some design of BlackBerrys. He's also overseeing the elimination of one-third of the workforce as he focuses on making the company a smaller, profitable maker of devices and software for its core of business and government users.
"BlackBerry is on sounder financial footing today with a path to returning to growth and profitability," Chen said in the statement. The company has "significantly streamlined" its operations, reaching its cost-cutting target a quarter ahead of schedule, he said.
"They're looking like they've successfully restructured this company for a better cost basis," said Michael Genovese, an analyst with MKM Partners. "But the next part after you do that is getting the revenue growth."
Chen has charmed investors with his vision of a company focused less on consumers and hardware and more on software and its key clients. To that end, Chen is introducing the new Q20 "Classic" phone, which has a physical keyboard and brings back the "menu," "send" and "end" buttons, missing features that alienated BlackBerry loyalists and led to disappointing sales.
He's also reminding them that a recovery isn't imminent. He reiterated today that he expects the company to stop losing cash by the end of the fiscal year that concludes in March 2015. He has also said BlackBerry will become profitable at some point in the following fiscal year.
The company got a $696 million tax refund from the Canadian government in December and said it expects another ''significant'' refund by the end of August. Last week, BlackBerry said it had reached an agreement to sell most of its more than three million square feet of Canadian real estate, which could fetch more than $500 million.
BlackBerry had $2.5 billion in cash and short-term investments at the end of last quarter, down from $3.1 billion at the end of November, it said today. It recognized revenue on 1.3 million smartphones last quarter, down from 1.9 million in the prior quarter.
The company said it actually sold 3.4 million BlackBerrys to customers last quarter, including shipments that had already been recognized for revenue, helping to cut its inventory by 30 percent from the previous quarter.