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Despite losing 3M subscribers, BlackBerry earnings positively surprise

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BlackBerry(s bbry) service subscribers decreased to 76 million, down 3 million from a quarter ago, but cost-cutting and hardware sales helped the company earn a profit in its final fiscal quarter of the year. On Thursday, the company announced adjusted income of $114 million on revenue of $2.7 billion for the quarter.

As service revenues decrease, BlackBerry is getting more of its revenue from hardware with 61 percent of sales from smartphones and, to a lesser extent, tablets. For the quarter BlackBerry shipped approximately 6 million handsets with nearly 1 million of those being the new Z10 handset. BlackBerry recently announced a 1 million unit order for the Z10 but did not clarify how many, if any, of those are accounted for in this most recent quarter. The company shipped 370,000 BlackBerry PlayBooks during the quarter.

On its investor call, BlackBerry President and CEO Thorsten Heins said investors should remember that BlackBerry is in the middle of a phased rollout, that sales are meeting expectations and that 235 carriers have been testing the new handsets favorably.

While the new phones’ rollout, Hiens says that legacy BlackBerry handsets will continue to generate service revenues to help fund the transition. And the higher average selling price of handsets — boosted by the new Z10 — is helping to offset any decreases in hardware sales. But this point could also add to BlackBerry’s challenges going forward. Most of the company’s growth is in regions such as Latin America and Africa where the market for an expensive flagship phone could be limited.

Even if the Z10 and upcoming Q10 handsets take time to generate more sales, the company says it is in good fiscal shape, now with $2.9 billion in cash, cash equivalents and short-term and long-term investments, which is up from $2.1 billion just three quarters ago.

5 Responses to “Despite losing 3M subscribers, BlackBerry earnings positively surprise”

  1. Tough road ahead

    I have been a blackberry user for 6 years and have very much appreciated the convenience and reliability of my devices. Mostly I appreciate the World Plan from ATT (grandfathered in as it is no longer availible) that gives me unlimeted intenational internet access and discounted international roaming charges for a flat montly fee. My montly cell phone bill is approximately $275. However, my next purchase will be an iphone because in the meantime I have bought two ipads for my kids (and me) and several iphones for my wife and a few hunderd dollars worth of apps that will immediately be available to me on my new ipone.

    This makes me think that a lot of other folks may be in my situation and that the decline is subsriber base is going to drastically accellerate unless the Z10 and Q10 sell extremely well.

    I am long Blackberry Puts Jan 2013 strike $15 for the following reasons:

    1) higher margins from the high priced bb10 family are great, but I don’t think these prices will clear the volume numbers that BB needs. Will demand support the high price or will they need to slash prices as they have for the BB tablet? To make up for lost service revenue the 10 family need to be a huge success, which does not appear to be the case. in my opinion this is because the value prposition to the consumer is just not there. Why should I spend the same on an unproven product albeit from a company with a good reputation, when I can purchase an Apple or a Samsung which are known to be on the cutting edge and whose thriving app develper community is constantly coming up with new cool ways to make the device into a very useful and entertaing tool. If I am going to give a relative “newcomer’ a chance, they will need to be priced more competitively than the standard bearing alternatives.

    2) a large number of current bb7 customers are waiting for their upgrade eligebilty to move to Apple or Samsung because of the ‘coolness factor’ or vested interests in the app and laptop desktop ecosystem.

    3) why increase ad spending by 50% only now. Seems to be a little late. They did not hype the launch well and now they will be playing catch up with the ad campaings competing directly with the Samsung Galaxy 4 launch and new iphone later this year both of which are sure to generate a tremendous amount of hype. Also, if the bb10’s don’t do well out of the gate in the US, the app developer community they have managed to get on board will soon lose interest in investing in a platform with a dubious future.

    4) no netflix, no instagram, no credit card readers for commercial transactions on the go. IS this even true? I’m not sure but BB has done nothing in its Ad strategy to convince me otherwise or alleviate my fears.

    5) I would like to know on what data Heins is basing his statement that 55% of BB10’s have been sold to customers coming from Android or iOS. I doubt this to be the case.

    Thanks for reading

    •  Luis Pires 

      Hey… More than 100.000 apps for a starting new OS that has about 2 months…
      And remember… BB10 is much more than an app launcher… and it rocks doing that… multi-rocks….

    • hundoman

      Also it is not like you can’t sideload almost any Android App you want and make it work on the BB 10 environment so that is a major plus.

      BB10 further has hands down the best HTML 5.0 compatable web browser of any of the smart phones which allows normal computer like access to web applications … sans the Flash part that is a now off all smartphone OS’s.

  2. Sean O'Grady

    Just regarding the large order that was placed 0 of those units make up the q4 numbers released today. That order will hit the books q1 of the next fiscal year.