Loss of US$60 million is relatively good, some think

BlackBerry CEO John Chen believes the Canadian company is on sounder footing, but numbers released today show it’s still struggling but making progress.

Revenue for the quarter ending May 31 was $966 million (all figures in US dollars), down $10 million from the previous three month period. It lost $60 million during the period, which apparently was better than most financial analysts were expecting.

“Our performance in fiscal Q1 demonstrates that we are firmly on track to achieve important milestones, including our financial objectives and delivering a strong product portfolio,”  Chen said in a statement.

“Over the past six months, we have focused on improving efficiency in all aspects of our operations to drive cost reductions and margin improvement. Looking forward, we are focusing on our growth plan to enable our return to profitability.”

“Bottom line, we feel good about where we are and what it will take to get BlackBerry back to cash-flow break even at the end of fiscal year 2015,” which will be Feb. 27, 2015, and to profitability in the 12 months after that.

He also confirmed that the next BlackBerry device will be called Passport, with a physical keyboard and a 4.5-in screen, will be launched in September. (By comparison the Q10 has a 3.1-in screen.) The new name doesn’t follow the “Q” nomenclature for BB10 devices with physical keyboards.

The BlackBerry Classic, a BB10 device with a trackpad, will be launched in November.

BlackBerry Messenger for Windows will be released next month, with BBM Meetings coming in September,BES 12 in November and QNX Cloud in December.

The company’s fiscal report shows it has cash on hand of $3.1 billion, up from $2.7 billion, which gives the company some maneuvering room.

In a conference call he told financial analysts that “we continue to make significant progress on our plan to return to growth and profitability. In Q1 all financial metrics show stabilization or improvements.”

During the quarter BlackBerry (TSX: BB) sold 2.6 million handsets. More interestingly, that was only 39 per cent of its revenue. Fifty-four per cent of revenue came from services, and seven per cent from software and other sources.

Among other things BlackBerry touts that it reduced operating expenses by 57 per cent over the past year. It’s adjusted gross margin was 48 per cent, up five per cent over the previous quarter.

During the quarter it also launched the Z3 smart phone in Indonesia, with demand ahead of company expectations, Chen said. The Z3 launched yesterday in Vietnam, and will come to eight more countries in Asia and India. The company also said that its trade-in program for competitive mobile device management suites has resulted in 120,000 licences for BES 10.

Overall 2,600 organizations have signed up for BlackBerry’s EZ Pass program for converting older versions of BES to BES 10, which Chen said is important as the company aims to increasingly monetize the enterprise platform’s services. For example, an extra change identity management capability will be offered later this year.

As discussed at its BlackBerry Live conference last year, the company wants to pull money in from BlackBerry Messenger (BBM) instant messaging service by selling extra services. The first was launched this month, called BlackBerry Protected. Chen said he is targeting revenue of more than $100 million next year.

These services will be focused on enterprises in developed countries, he added, including the eBBM suite for secure collaboration on voice and data. For consumers there’s a mobile payments system called BBM Money, first launched in Indonesia.

Similarly, there will be efforts to get more money from selling extra services for organizations using BlackBerry Enterprise Services (BES). The first will be identity management.

Chen also mentioned a new agreement that will give users with BB 10 devices access to Amazon’s Appstore and close its consumer music and video download service. Access will start when BB 10.3 is released in the fall. “This will free our resources up to go after secure enterprise-class applications,” Chen told analysts. The Amazon store, which has 240,000 Android apps, giving uses an application ecosystem. The store will also have the BB 10.3 OS for those who want to update their handsets that way.

 

[More to come]

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