BlackBerry springs surprise with return to profit
The earnings provide a first glimpse of how RIM's new touch-screen BlackBerry Z10 is selling internationally since its debut on January 31.
The 1 million sales of the Z10 phones exceeded the 915,000 analysts had been expecting.
The BlackBerry, pioneered in 1999, was 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.
RIM faced numerous delays modernising its operating system with the BlackBerry 10. During that time, it had to dismiss more than 5000 employees and saw shareholder wealth decline by more than $US70 billion ($67 billion).
In the quarter that ended March 2, RIM earned $US98 million, compared with a loss of $US125 million a year earlier.
Revenue fell 36 per cent to $US2.7 billion, from $US4.2 billion.
Despite the sales of the BlackBerry 10, RIM lost about 3 million subscribers, to end the quarter with 76 million.
Bill Kreher, 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," Mr Kreher said.
RIM, which is changing its name to BlackBerry, said it expected to break even in the current quarter.
"To say it was a very challenging environment to deliver improved financial results could well be the understatement of the year," chief executive Thorsten Heins said during a conference call with analysts.
"I thought they were dead. This is a huge turnaround," Jefferies analyst Peter Misek said from New York.
Mr Misek said the Canadian company "demolished" the numbers, especially its gross margins. RIM 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.
Frequently Asked Questions about this Article…
Yes. In the quarter that ended March 2, Research In Motion (RIM) reported a profit of US$98 million, compared with a loss of US$125 million a year earlier, marking a surprise return to profitability that beat Wall Street expectations.
RIM said it sold about 1 million of its new BlackBerry 10 Z10 devices since the phone’s international debut on January 31, exceeding analysts’ expectations of roughly 915,000 units and providing a first glimpse of Z10 international demand.
Revenue fell 36% to US$2.7 billion from US$4.2 billion year‑on‑year. The company attributed improved profitability partly to higher average selling prices and stronger device margins, so investors should note profit can improve even while overall sales revenue declines due to pricing and margin changes.
Yes. Despite Z10 sales, RIM lost about 3 million subscribers and finished the quarter with 76 million subscribers. Some analysts, like Bill Kreher of Edward Jones, described the subscriber decline as “pretty alarming,” and said it may take a couple of quarters to understand the trend.
RIM reported gross margins of 40%, up from 34% a year earlier. Higher gross margins matter because they indicate the company is making more profit per device sold, which helped drive the return to profitability despite lower overall revenue.
Yes. The company said it is changing its name to BlackBerry. For investors, the rebrand signals a continuation of management’s effort to reposition the business while the company also said it expected to break even in the current quarter.
RIM faced long delays modernising its operating system with BlackBerry 10, laid off more than 5,000 employees, and saw shareholder wealth fall by more than US$70 billion (about US$67 billion). Management has described the recent period as a very challenging environment for improving financial results.
Keep an eye on a few things: whether the company meets its goal to break even in the current quarter, continued international sales of the BlackBerry Z10, subscriber trends (whether losses continue or stabilise), and whether improved gross margins hold. Analysts say it could take a couple of quarters to see if the turnaround is sustainable.
Call 1300 880 160
Start a chat
Schedule a call
