BlackBerry posted a slight profit of $23 million US in the three months to the end of May, a performance that was better than what analysts were expecting and enough to push the company's shares higher on the TSX.
The Waterloo, Ont.-based smartphone maker, which reports in U.S. dollars unless otherwise noted, posted a loss of 11 cents a share when the accounting is adjusted for the impact of a cost-cutting program and a change in the value of the company's debentures, but the positive net income figure was welcomed warmly by investors as an improvement on the loss of $84 million in the same period a year ago.
Revenues dropped by $10 million to $966 million, down from $977 million in the previous quarter, although the company's cash and investments balance for the first quarter was $3.1 billion, up from $2.7 billion at the end of the previous quarter.
The company's annual general meeting kicked off on Thursday morning, a few hours after the quarterly numbers were released before stock markets opened.
During the quarter, BlackBerry booked revenue for about 1.6 million smartphone sales, which is an increase from the revenue from 1.3 million devices a quarter earlier.
The results demonstrate that the company is "firmly on track to achieve important milestones, including our financial objectives and delivering a strong product portfolio," CEO John Chen said.
"Everything BlackBerry does is about security — we will not lose that fight," he said.
When asked what the odds of the company's survival are, he said they're looking pretty good, but not for certain. "When we start making money, I'll give it 100 per cent," Chen quipped.
During the quarter ended May 31, the company launched the Z3, a low-cost touchscreen smartphone, in Indonesia, a market that Chen described as "huge" for BlackBerry.
According to Chen, sales of the Z3 were exceeding expectations, but he would not disclose exact numbers.
“We originally expected to do a million phones, we’re going to do better than that,” said Chen, indicating that the numbers were expected over the lifetime of the device.
BlackBerry shares gained more than $1, or almost 11 per cent, to $10.03 on the TSX on Thursday. It closed up 9.3 per cent at $9.84.
New BlackBerry phones
Chen also offered a glimpse at what the company has up its sleeve moving forward, including a large phone known as the Passport, which looks a little like a cross between a small tablet and a large phone.
“I would like to call it a phablet, the reason I couldn’t call it a phablet today is because marketing won’t let me, that’s number one,” joked Chen. “Secondly because you have to go clear some of the FCC certifications and so forth, but it really is the beginning of our phablet.”
Chen hinted the phone, code named Windermere would also have a mobile-reader capabilities. “You can read a book like you’re flipping the page,” he said.
But Canadians will have to wait to get their hands on the large phone.
“We’re going to launch this first in Europe. The Europeans love it,” said Chen, who said the company is planning to launch the phone in September.
Chen said the company hopes to be at the break-even level financially by the end of this fiscal year, and hopes to return to profitability within two years.
“BBM, as I said, we now have a reasonable plan to expect next year we could go a $100 million, gross a $100 million in revenue,” said Chen, explaining the revenue expected for the next fiscal year would come from sources that would include BBM Protected, mobile payment systems like BBM Money in Indonesia, the EnStream mobile payments deal, and working with advertising placement companies to sell advertising on BBM channels.
Earlier this week, BlackBerry announced a partnership with the Amazon Appstore that will allow users access to apps like Pinterest and Netflix, and last week touted the mobile-payment deal with EnStream, a joint venture between Bell, Rogers and Telus.
“For the first time we finally quote unquote solved a big part of our application ecosystem problems,” said Chen of the Amazon deal.
Chen said the company is at the tail-end of the layoffs announced in September 2013, when the company said it would be cutting 4500 workers from its global workforce.
“I’m actually in the process of focusing on hiring. That’s why I went to the University of Waterloo and said, ‘I want co-ops and I want students, graduating students.’ And I’m doing that pretty much around the world, we’re now re-staffing,” said Chen.
“I’ll probably start modestly because of the challenges we were just talking about earlier, probably a few hundred, and just go from there.”