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Josh Miller/CNET
The road to recovery is a long one for BlackBerry.
The provider of smartphones and business and security software posted a fiscal first-quarter loss, excluding one-time items, of $28 million, or 5 cents a share, on revenue of $658 million. Analysts, on average, had forecast a loss of 3 cents a share and revenue of $679 million, according to Thomson Reuters.
The Canadian company, hammered by competition in the mobile world, is in the midst of transforming from a pure smartphone manufacturer into a company focused more on business software and services. While CEO John Chen says BlackBerry will remain in hardware, his eyes are clearly set upon the more lucrative software side. Indeed, it’s the software side that showed life this quarter.
BlackBerry’s burgeoning software and technology licensing business showed progress. It grew 150 percent year over year to $137 million, giving analysts hope that its transformation is working.
“The results indicate the next phase of its turnaround is off to a solid start despite slight top and bottom line misses,” said Cowen analyst Bryan Prohm.
The hardware business, meanwhile, isn’t completely gone. BlackBerry said it “recognized hardware revenue” on roughly 1.1 million smartphones with an average selling price of $240. BlackBerry CEO John Chen hinted at a stronger marketing campaign for the products now that it has more retail and carrier partners in place — including a reunion with T-Mobile.
The rate at which BlackBerry introduces new products has slowed significantly, with the company courting its shrinking base of die-hard users with a only handful of products, including the Bold-like BlackBerry Classic and the squat BlackBerry Passport. Its latest product, the BlackBerry Leap, is an all-touchscreen smartphone meant to appeal to younger professionals in large companies.
The Passport was selling “steadily,” while the Classic saw an uptick, Chen said, although he declined to provide specific numbers.
BlackBerry said that it struck joint development and manufacturing agreements with Wistron and with Compal Electronics to build new devices, expanding beyond its partnership with Foxconn.
BlackBerry said its revenue mix was 40 percent hardware, 38 percent services and 21 percent software and technology licensing. The company signed up 2,600 business customers in the period, with 45 percent of the licenses associated with deals that span different mobile operating systems, such as Apple’s iOS and Google’s Android.
Excluding one-time items, BlackBerry turned a profit of 13 cents a share, but the results were helped by a change in the value of its debt. The company ended the period with $3.32 billion in cash and investments, up $50 million from the prior quarter.
“We’re on solid financial footing,” Chen said on a conference call.
Looking ahead, BlackBerry continues to expect positive free cash flow, and it also continues to target profitability excluding one-time items in fiscal 2016.
BlackBerry shares inched up 1 percent to $9.20 in premarket action.
Updated at 6 a.m. PT: To include CEO and analyst commentary.
