Is BlackBerry back in black?

A quick look at BlackBerry’s financial statement confirms the tale of a company trying to shrink its way to profitability

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All but left for dead, smartphone pioneer BlackBerry has punched an emaciated fist through the dirt covering its supposed gravesite. The Waterloo, Ont.-based company surprised just about everyone Thursday by reporting a much smaller than expected $60-million loss in its fiscal first quarter. When various one-time items were added in, including an adjustment to the valuation of its convertible debentures, Blackberry even managed to squeeze out a $23-million profit—at least on paper.

Investors reacted quickly. BlackBerry’s shares soared 12 per cent to $10.09 on the Toronto Stock Exchange shortly after the results were released. Analysts, meanwhile, said the unexpectedly strong performance suggests BlackBerry’s battered business, decimated by competition from Apple’s iPhone and devices running Google’s Android software, may have finally been stabilized.

The company isn’t out of the woods yet, of course. But new CEO John Chen claims he can finally see some light filtering through the trees. “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 in a statement. “Looking forward, we are focusing on our growth plan to enable our return to profitability.”

So far, the recipe for getting BlackBerry back on track has included massive cost-cutting—selling real estate in Waterloo, slashing jobs and outsourcing the production of new BlackBerry models. The BlackBerry Z3, a low-cost touchscreen model released in Indonesia this year, was designed and manufactured by Taiwan’s Foxconn, which also makes Apple devices. Chen also unveiled a new, keyboard-equipped phone with a larger, 4.5-inch screen called at the company’s annual general meeting today in Waterloo. It’s called the Passport and will be officially launched in September.

At the same time, Chen plans to refocus the company on selling more profitable software and services, ranging from its popular BlackBerry Messenger client to new services that connect a growing number of machines to the Internet and each other. That’s key because BlackBerry’s once-dominant share of the smartphone market is expected to fall below one per cent globally this year, according to a recent forecast by IDC. “The only way the company will be viable is likely through a niche approach based on its security assets,” IDC’s analysts said.

A quick look at BlackBerry’s financial statement confirms the tale of a company trying to shrink its way to profitability. In the three months that ended on June 1 of last year, BlackBerry racked up more than $3 billion in revenue (and posted an $84-million loss in the process). The sales figure for the same period in 2014? Just $966 million.