BlackBerry first quarter results 2013

BlackBerry reported its Q1 2014 fiscal year results just a short while ago and they weren’t what the market expected or wanted. First off the bad news. There’s no BB10 coming to the PlayBook as they said the user experience wasn’t good enough to continue development but they said they’d continue to support the existing OS on the PlayBook.

The Bad News contd:

• BlackBerry reported a loss of $84 million USD for Q1 2014.
• 2014 fiscal year is transition year and a year of investment.
• They expect Q2 2014 operating losses.
• 6.8 million BlackBerry devices shipped up from 6 million in Q4 (40% were BB10 devices so 2.72 million devices were BB10 which is on the lower end of analysts expectations) but no info on sell through.
• Due to Venezuelan foreign currency rules they were unable to collect or record 72 million USD of revenue from that market.

The Good News:

• 3 out of 4 regions grew in the last quarter.
• 6 new devices in the market at any one time – this is a goal.
• 320 carriers accepted (96 countries) Q10 and 50 more countries to launch it in Q2.
• All products will eventually move to BB10. OS 7 wont be left behind incl. developing markets and enterprises. One new BB7 device this year for developing markets.
• One more BB10 product launch this year (Could this be the 5 inch Aristo model)
• BBM will launch on iOS and Android (with Chat and BBM Groups) by the end of the Summer
• They are at their highest cash position (3.1 billion USD on hand) in 3 years
• Days Sales Outstanding (DSO) is a measure of how long it takes a company to collect money that it is due and these have declined for BlackBerry which is good as it means they’re collecting cash faster then before.

 

While the results are well below market expectations (currently the share prices is down 23% to 11USD a share) the market had been surprised recently by rumours of huge profits for BlackBerry. If expectations hadn’t been so high after the previous Q4 surprise return to profit  then maybe these results wouldn’t have shocked so much. Also the Q10 hasn’t been in the market for a full quarter so that should have a better impact next quarter. It’s clear the Z10 sales are not stellar which is disappointing as it will be difficult for BlackBerry to convince devs to build apps for the platform but there are some very strong positives. BlackBerry is not in debt, they have 3.1 billion in cash, the Q10 is certainly selling better then the Z10 so next quarter should see higher volumes of shipped devices and the Q5 is just launching now into developing markets. It’s difficult to comment on BlackBerry at present and I think we’re going to need to wait for the full 2014 fiscal years results for a proper view. If they are not back in profit by the end of 2014 fiscal year drastic decisions will have to be made.