Profit and positive cash flow keep BlackBerry moving forward

Despite falling smartphone sales and lower revenues on services, BlackBerry eked out a $0.01 per share profit it its most recent fiscal quarter. It also managed to put more money in the bank, creating a positive cash flow of $43 million in the three months ended November 29, 2015. As a financial entity with $3.1 billion in cash and investments, BlackBerry is being managed well. Unfortunately, it doesn’t directly control its smartphone sales and service revenues, which is the other half of the equation.

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The company says it recognized quarterly revenue from 2 million smartphones although only 1.9 million were actually sold through to customers. That’s down from the 2.4 million [company]BlackBerry[/company] phones sold through in the prior three months, even though the company launched its squarish new BlackBerry Passport handset in the most recent quarter.

In fairness: The phone wasn’t available for the full three-month period. And the company is now selling its new BlackBerry Classic, so I’m very interested in smartphone sales figures for the next quarter.

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Unfortunately, service revenue is down too: BlackBerry reported $356 million in this area according to the Globe and Mail, which is a 12 percent decrease from the prior three months. The revenue mix between services and hardware is now relatively even, with each segment contributing 46 percent to the bottom line. Only a few years ago, that mix was closer to 80 / 20 between hardware and services.

BlackBerry says this is all progress towards what it calls its eight-quarter plan. In a statement BlackBerry CEO said,

“We achieved a key milestone in our eight quarter plan with positive cash flow. We also attained another important milestone in the release of our new enterprise software products and devices. Our focus now turns to expanding our distribution and driving revenue growth.”

Financially, the company is making good decisions to manage expenses, build more cash and generate profits, even if they’re small. The question left remaining is: What happens when the eight quarters have passed?

Perhaps the company is looking to spruce up its books and acquire some interesting technologies — it purchased a smartphone security company, Secusmart in July and announced closure of that deal today — in hopes of a suitor that can use some of what it has. Then again, Chen said the company can be profitable with sales of just 10 million phones a year. I suspect that’s the end goal and any additional sales would just be a bonus.