BlackBerry Ltd (BBRY) reports profit of $23 million

Posted Jun 19, 2014

BlackBerry, the Canadian smartphone company, has reported its earnings results for Q1 for fiscal year 2015 today. BlackBerry reported a small profit of $23 million ($0.04 a share) under GAAP (General Accepted Accounting Principles). If you remove the GAAP adjustments, which were non-cash changes, BlackBerry reported a loss of $60 million ($0.11 a share) for the quarter. BlackBerry CEO John Chen is heavily focused on bringing the company back to profitability with more of a focus on enterprise and government customers. Chen was named CEO seven months ago. Here are some of the other stats:
– Cash and investment balance was at $3.1 billion at the end of Q1 2014, up from $2.7 billion the prior quarter
– Adjusted gross margin is 48% from 43% in Q4 2014
– 2.6 million phones sold to customers
– Revenue hit $966 million, down from $3.07 billion a year ago

In an earnings call, Chen emphasized the company’s focus on enterprises and regulated industries even though BlackBerry devices are still popular with consumers outside of the U.S., including Indonesia.

BlackBerry partnered with Foxconn last year to deliver a new handset for the Indonesian market, which is the BlackBerry Z3. The Z3 will be shipped to Vietnam and India in the next several weeks. Foxconn designed the phone and handles the inventory. BlackBerry’s margin on each of the devices is around 10%. In order to become profitable, BlackBerry would likely have to sell around 10 million devices per year.

BlackBerry sold 2.6 million devices in Q1, but recognized revenue on 1.6 million due to poor inventory calculations and write-downs in previous quarters. However, the company is less interested in selling hardware. There are growth opportunities in the mobile device management market. BlackBerry issued 1.2 million EZ Pass licenses for BES10, the MDM program that manages BlackBerry and non-BlackBerry devices in the quarter. EZ Pass lets businesses trade in old BlackBerry OS or MDM licenses for free management on the BlackBerry platform. The free access turns into a paid model for the devices, which could upsell more services. BES12, the successor to BES10, is expected to arrive later this year.

Earlier this week, BlackBerry announced that it would ship phones with Amazon’s Appstore this fall in conjunction with BlackBerry 10.3. This would let BlackBerry focus more on the consumer side of the company and work on native solutions for enterprises.

Stock Tag: BlackBerry Ltd (NASDAQ:BBRY)