The Canadian company, which has lost most of the smartphone market
to Apple Inc's iPhone and gadgets powered by Google Inc's Android
operating system, has laid off thousands and agreed to sell most of
its real estate.
Chen said he expects to be cash flow positive or neutral by the end
of the current fiscal year, which runs to early March 2015. He does
not expect to turn a profit until sometime in the following fiscal
year. At a round table with media on Friday afternoon, Chen said he
also does not expect revenue growth until some time that fiscal
"John Chen did what John Chen is known for. He came in and he's cut
the cost base," said BGC Partners technology analyst Colin Gillis,
who noted the company's "precipitous" revenue drop. "He's buying
himself some time."
Research and development expenses fell 24 percent in the fourth
quarter from a year earlier, while selling, marketing and
administration costs dropped 35 percent.
Shares of BlackBerry, whose share of the global smartphone market
was below 1 percent at the end of 2013, rose in early trading but
closed down 7.1 percent at $8.41.
BlackBerry's Nasdaq-listed shares were trading above $60 in early
2011 but dropped sharply that year, and have not risen above $20
Morningstar analyst Brian Colello said BlackBerry's operating
expense reductions were encouraging, to a point.
"The big question still remains what BlackBerry can do on the demand
side," he said. "A lot of their moves have been supply related and
internal, but we're still looking for strong signs that demand is
Under Chen, the Waterloo, Ontario-based company is focusing on its
services arm, which manages mobile devices on the internal networks
of big clients.
The share of BlackBerry's revenue from hardware continued to decline
in the quarter, to 37 percent from 40 percent in the third quarter
and 61 percent in the fourth quarter of last year.
Ross Healy, a portfolio manager at MacNicol & Associates, which has
a small stake in the company, said BlackBerry is becoming a more
attractive acquisition target.
"You can't cut your way to revenue, but what you can cut your way to
is profitability," he said.
[to top of second column]
BACK TO THE FUTURE
The company's newer BlackBerry 10 phones have not lived up to high
expectations, and after heavily promoting several devices with
touch-screen keyboards, it is returning to its roots, emphasizing
the physical keyboards its most loyal fans covet.
Last month BlackBerry unveiled a new "classic" model with a
keyboard. Chen told Reuters in an interview that BlackBerry was
designing three new keyboard-centric devices and would probably
introduce them in the next 18 months.
On Friday's conference call, Chen said the company was set to begin
a new production run of its Bold devices that run on the older
BlackBerry 7 platform as demand for them remains strong.
The company said it had recognized hardware revenue on about 1.3
million BlackBerry smartphones during the fourth quarter, compared
with about 1.9 million devices in the third quarter.
It also said about 3.4 million devices were sold through to end
customers, and this included shipments made and recognized before
the fourth quarter. The company said 68 percent of these devices
were BlackBerry 7.
Its net loss was $423 million, or 80 cents a share, for the fourth
quarter ended March 1. That compared with a year-earlier profit of
$98 million, or 19 cents a share.
Revenue fell to $976 million from $2.68 billion. Analysts on average
had expected $1.11 billion, according to Thomson Reuters I/B/E/S.
Excluding restructuring charges and other one-time items, the
company reported a loss of 8 cents a share. The analysts' average
estimate was a loss of 55 cents.
(Additional reporting by Leah Schnurr in Toronto;
editing by Chizu
Nomiyama, Jeffrey Hodgson, Sophie Hares, Meredith Mazzilli; and
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