Priv Sales Help Boost BlackBerry's Sagging Fortunes - InformationWeek

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12/21/2015
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Priv Sales Help Boost BlackBerry's Sagging Fortunes

BlackBerry's latest financial report reflected a smaller quarterly loss and first revenue gain in over two years.

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BlackBerry surpassed expectations in its financial earnings report released Dec. 18, when it announced a smaller Q3 loss and its first quarter-to-quarter revenue boost in over two years.

The company reported a loss of $89 million, or $0.17 per share, for the quarter ending Nov. 28. After accounting for restructuring costs and other one-time events, this loss goes down to $15 million.

Quarterly revenue totaled $548 million for Q3. This marks a 31% drop from the $793 million it reported for the same quarter last year, but an increase of almost 12% from Q2.

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This quarter's loss is a big improvement from the loss of $148 million, or $0.28 per share, it reported one year prior.

BlackBerry's financial results topped expectations. On average, analysts anticipated the Waterloo, Ontario-based company to report revenue of $489 million and loss of $0.14 per share, according to Reuters.

The small gains are progress for a company in the midst of a turnaround, but there is still work ahead. BlackBerry CEO John Chen predicts that the business will achieve sustainable profitability during the 2017 fiscal year.

The improvement was driven by increases in revenue for both software and hardware -- areas the company had been struggling in.

Software and services generated $162 million of BlackBerry's total revenue, an increase of 119% from the second quarter and 183% year-over-year. Acquisitions of Good Technologies and AtHoc contributed to the software boost.

This quarter marks the first time BlackBerry's higher software earnings made up for a decline in monthly service fees from the company's older devices, said Chen.

Going forward, software will continue to be a key focus area for the company as it continues to transform. BlackBerry is trying to become more of a software company, and it's prioritizing security in its software and services.

BlackBerry sold 700,000 hardware units in Q3, a drop from 800,000 during the previous quarter. Sales totaled $214 million compared with $201 million in the second quarter.

(Image: Blackberry)

(Image: Blackberry)

Higher earnings resulted from larger price tags on BlackBerry smartphones. The average selling price (ASP) for devices rose from $240 to $315, an increase related to the release of the BlackBerry Priv.

The Priv, an Android-based smartphone with a slide-out tactile QWERTY keyboard, debuted at $699 after a discouraging Q2 earnings report. BlackBerry has reportedly taken additional steps to secure the Priv, which is the company's first smartphone to run Android, against malware and other security threats.

While specific sales numbers for the new smartphone were not released, the increases in both ASP and sales figures indicate the Priv had a role in boosting the numbers. BlackBerry plans to release the Priv in 31 counties by February 2016, at the end of its current quarter.

BlackBerry's future in the hardware business will weigh heavily on how the Priv performs during the months to come.

"I've said that if we cannot make money we're going to get out of the phone business, and I mean hardware," said Chen, noting that BlackBerry's software could run on Apple, Android, or Windows smartphones. "We will remain in the phone business one way or the other."

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Kelly Sheridan is the Staff Editor at Dark Reading, where she focuses on cybersecurity news and analysis. She is a business technology journalist who previously reported for InformationWeek, where she covered Microsoft, and Insurance & Technology, where she covered financial ... View Full Bio

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