BlackBerry has just finished their earnings call for reporting their Q4 fiscal results and it was quite surprising. BlackBerry, in only their first part quarter since launching the Z10 (their first BB10 device), has returned to profit. They reported $0.22 earnings per share despite (EPS) generating lower-than-expected revenues of $2.7 billion in its fourth fiscal quarter. Expectations of the street were that BlackBerry would report a loss of $0.39 EPS on revenues of $2.84 billion so this is significant.
According to BlackBerry they shipped 6 million devices in Q4, down from 6.9 million devices last quarter, and of that figure they have shipped about 1,000,000 Z10 devices since launch which represents a mid point between street expectations of between 300,000 and 2,000,000 devices sold. While revenue dropped compared to market expectations it’s thought that the increased average selling price (ASP) of the Z10 is making up the bulk of the profit. BlackBerry has been able to take a lot of strength from its large cash holdings which have remained strong but people expected them to burn through the cash with the launch of BB10 devices and again surprisingly they have managed not only to avoid loosing cash but they have actually increased cash reserves (They had 2.1 billion dollars cash at start of year and now have 2.9 billion dollars cash). Hardware revenue now accounts for 61% of total revenue as they transition away from the old subscriber model. Subscriber numbers which now include BB10 sales were down slightly from 79 million last quarter to 76 million and further single digit drops are expected as people drop BB6 and 7 devices faster then they take up BB10 devices. The increased ASP of BB10 devices should offset the decrease in revenue from these drops in subscriber numbers. The Q10 physical keyboard device should begin launching in April and already 40 carriers across 20 countries are testing the device. I’d expect to see significantly increased sales being reported of BB10 devices as a lot of current BlackBerry subscribers are holding out for the Q10. This is backed up by the fact that 55% of Z10 customers (all touch screen device) are coming from other non BlackBerry platforms.
BlackBerry have said they plan to increase innovation with new services in the future (which could be new BIS style services for BB10). They also plan to move more into automotive, aeronautical and healthcare areas with their technology. It sounds to me from this type of talk that they are no longer looking to sell the company. They expect to launch mid range BB10 devices mid fiscal year this year (not calendar year!).
I get the feeling from this earnings call that (finally) BlackBerry are being conservative with their sales figures going forward and we should see them hitting and exceeding street expectations particularly with the launch of the Q10 in April. Finally as an aside they also managed to ship approximately 370,000 BlackBerry PlayBook tablets in the quarter too. Not bad for a 2 year old device. So are BlackBerry back? Well it’s too early to say but certainly things are looking significantly better for them. Q1 fiscal results next quarter will contain more relevant detail as they will show a full quarter of an almost worldwide launch of BB10 devices.
Full Press Release here