BlackBerry reduces losses, but handsets still struggle

BlackBerry reported a narrower third-quarter loss than analysts estimated as software revenue kicked in from its acquisition of Good Technology, helping offset the struggling handset business.

The loss excluding certain items was 3 cents a share, the Canadian company said Friday in a statement. Analysts had predicted a loss of 14 cents.

Revenue was $557 million (€513m) compared with projections for $488.8 million. BlackBerry is making progress toward a goal of $500 million in annual software revenue by March 2016, a key part of chief executive John Chen’s plan to move the company away from relying on shrinking handset sales.

Software sales were $161.5 million, up from $54 million in the same quarter last year.

“That’s encouraging - that tells me they’re on track to hit their $500 million target,” said John Butler, an analyst at Bloomberg Intelligence.

The software revenue boost gets the company closer to that goal and emphasises the importance of the shift in strategy.

700,000 handsets

BlackBerry sold 700,000 handsets in the period, fewer than some than some analysts had forecasted, and down from the previous quarter.

Analysts had been watching to see if the Priv, BlackBerry’s newest phone and the first to run on Google’s Android operating system, would take off.

Hardware revenue was $222.8 million, down from a year earlier but up from $201 million last quarter.

“My first goal is to get us into a break-even position with the device business,” Mr Chen said on a conference call with analysts.

“Maybe next quarter, maybe a quarter later, but we’re in that ballpark now.” Once that point is reached, strategic options become available, Mr Chen said. Still, there’s a good chance the company will make devices profitable and stay in the business, he said.

BlackBerry needs to sell about five million phones a year for the unit to be sustainable, chief financial officer James Yersh said on the call.

Mr Chen hinted that the company will unveil new software relating to self-driving cars at the Consumer Electronics Show in Las Vegas in January.

Bloomberg