BlackBerry may well have posted another quarterly drop in smartphone sales, but improved margins on the back of greater cost efficiencies might suggest that talk of a turnaround at the beleaguered Canadian firm is not entirely groundless.
CEO John Chen (pictured), who took over the BlackBerry helm last November, is certainly optimistic that things are going in the right direction.
Speaking at the company’s conference call for fiscal Q1 2015, he said “all financial metrics show stabilisation”. He anticipated BlackBerry would return to profitability in fiscal 2016.
“Over the past six months we have focused on improving efficiency in all aspects of our operations to drive cost reductions and margin improvement,” he said.
Revenue for the three months ended 31 May was $966 million, down 1 per cent from the previous quarter. Chen’s plan is to focus on more profitable revenue from services (such as BBM instant messaging). Encouragingly, services represented more than half of Q1 turnover (54 per cent).
The remainder of sales was made up by hardware (39 per cent) and software & other revenue (7 per cent). Chen admitted that BlackBerry had still to hit breakeven point on hardware, but added it was getting “very close”.
Smartphone sales, however, continue to slide. During Q1, around 2.6 million BlackBerry smartphones were sold through to end customers, compared with 3.4 million the previous quarter.
Chen was nonetheless pleased by the “successful” launch in Indonesia of its Z3 “Jakarta edition”. An additional eight countries are slated for Z3 launch, including India.
Chen added that BlackBerry’s deal with Amazon this week would also free up resources to develop enterprise apps.
Cash burn during the quarter was $255 million, a welcome large reduction from the $784 million used up in the previous three months. BlackBerry’s cash pile, as of 31 May, was $3.1 billion, up from $2.7 billion at the end of the previous quarter.
BlackBerry made a Q1 net profit, based on GAAP, of $23 million – but that takes into account some non-cash items and a tax refund. Take those away and BlackBerry made a net loss of $60 million.