BlackBerry’s turnaround is gaining momentum, after demand for chief executive John Chen’s first major new device outstripped supply and the company reported a smaller loss than estimated.
BlackBerry’s net loss narrowed to 2 cents a share, excluding one-time items, in the fiscal second quarter that ended August 30, the company said in a statement. That’s better than the 16-cent deficit projected by analysts.
The narrower-than-expected loss was bolstered by cost cuts and stabilising smartphone sales. Mr Chen has also sworn off the consumer handset market and instead concentrated the company's smartphone efforts on business professionals, selling 200,000 of its new square-screen Passport phone in its debut this week. It's all part of his plan to return to profit next fiscal year.
“Our workforce restructuring is now complete, and we are focusing on revenue growth with judicious investments to further our leadership position in enterprise mobility and security,” Chen said in the statement.
BlackBerry makes a profit on each Passport phone sold at the current price points of US$599 in the US and C$699 in Canada, Mr Chen said on a conference call. The Passport sold out in 6 hours on BlackBerry's website and within 10 hours on Amazon.com, he said. The phone was introduced two days ago, after the end of the fiscal second quarter.
Since Mr Chen took over in November, he has sold real estate, outsourced manufacturing and worked to expand revenue from business services and the BBM instant messaging service. Mr Chen, who took the helm after a buyout failed, said he isn’t interested in selling the company’s intellectual property.
BlackBerry, based in Waterloo, Ontario, said it still plans to reach break-even cash flow by the end of this fiscal year. The company ended the quarter with $3.1 billion in cash, including short-term and long-term investments.
The company used $36 million of cash in the period, compared with $255m in the first quarter. That was better than the estimate from Mark Sue, an analyst at RBC Capital Markets, for operating cash burn of $145m.
With the focus on enterprise, BlackBerry is pushing ahead with devices like the Passport that cater specifically to that audience, shunning the more consumer-oriented devices like Apple’s larger iPhone 6 Plus designed for video consumption. The square-screened Passport is designed for business users who write e-mails, study spreadsheets and read documents on their phones.
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