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BlackBerry Q4 Earnings Report Surprise Profit Despite Slip In Revenue

March 30, 2015 | About:

BlackBerry Ltd. (BBRY) witnessed its lowest quarterly sales in a period of eight years. Revenues witnessed a drop of 33% in the fourth quarter The company launched two new models – the Classic and the Passport, of which both failed to nullify the effect of the drop in sales. In order to make up for lost sales, the company has come up with software that enables companies to manage their employees' electronic products. This, however, hasn't reaped much incentive for the company. A surprise profit was however reported for the quarter. After the announcement was made, share value rose around 5.1% due to the unexpected profit.

Quarter review

The handheld-device manufacturer reported a profit of $28 million in the fourth quarter. The main reason for the unexpected rise in profit was the sale of a patent along with the recovery of taxes. Blackberry suffered a loss of $106 million on operating costs. For the year 2014, a loss of $304 million was reported on revenue of $3.3 billion. The fourth quarter revenue earned was $660 million. Analysts had predicted the revenue to be $833.1 million. This expected value is almost 20% less than the revenue earned in the same period last year. The earned revenue was a huge disappointment as compared to the revenue earned last quarter. This quarter saw the mobile firm launch two new models. One was the Blackberry Classic – where phones bore the features of the older models, and the other was the Blackberry Passport – which featured a unique screen shape. These models were mainly manufactured for the traditional Blackberry patrons. Sadly, both the models failed to create an impact. An analyst at Morningstar said that the availability of these models were restricted to very few areas in the U.S. He said that, though Blackberry is doing a good job in eliminating the cash burn during its business transaction, the low demand is something to be concerned about. The cash flow for the Canadian smartphone maker increased to $76 million for the same quarter while the cash position stood at $3.27 billion. This is a positive increase as compared to the cash position of $3.1 billion in the third quarter.

Management guidance

Blackberry CEO John Chen said that the main focus now is stabilizing the company's revenue. He said that Blackberry will now try to capture more patrons to use their products, which includes software for employee tracking and mapping. One of them is the QNX OS, whose use is applicable in reactors, cars, etc. Share value increased to a high of $9.77, and then reduced slightly to $9.59. This was a 3.1% increment, despite the reported low sales. Mr. John said that the analysts’ expectation of losses was reasonable, and the company will make efforts to perform better. It is essential to prove that Blackberry has a sound financial position so as to ensure that firms and government have confidence to buy the company's software, he said.

The days ahead

The company now hopes that the new software will gain more entry in the corporate world despite the large number of people using iPhones and Android phones. John Chen asked for two quarters to get their carriers trained. Mostly, the company will pick up on its lost sales as the company has reached the center of its turnaround effort. The cost-cutting measures should work in the company's favor and, hopefully, shareholders will reap good rewards in the quarters to come.

About the author:

Business Reports
We are a group of analysts exploring and analyzing different domains of business and writing reviews based on information available in public domain web portals. We do not hold any stock or investment position in any of the companies that we write for.

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