PRIV POSITIVES?
As BlackBerry announces results, focus will be on sales of its new slider keyboard smartphone,
Although investors will be looking for acceleration in software revenue growth when BlackBerry Ltd. reports earnings Friday, much of the focus remains on the handset business, specifically sales of the company’s first Android-powered device, the Priv.
BlackBerry’s fiscal fourth quarter will capture the first full quarter of sales of the slider-keyboard smartphone, which launched in early November in Canada with a $799, contract-free price tag, as well as in the U.S. and the U.K. before expanding to a handful of other countries.
In its December earnings report, BlackBerry did not break out Priv results from overall hardware sales, which include handsets running the proprietary BB10 operating system. But CEO John Chen is sure to be asked about the device in Friday’s earnings call with analysts.
“The next three or four months will tell us whether this is a good strategy,” Chen told reporters in December, when he promised additional Android phones with mid-range pricing options if the initial version is well-received.
Reviews have been largely positive for the Priv, which features a 5.4-inch display and 18-megapixel camera, along with Google Play apps and enterprise-ready privacy features. However, many say the device is pricey compared to its peers.
BlackBerry reported 700,000 smartphone shipments in the third quarter, versus 800,000 in the previous three months. But the Waterloo-based compa- ny said cost cutting and a rising average selling price means it can stem losses if revenue is recognized on just five million devices in 2016.
Chen has also said the company could shut down the handset division, to focus exclusively on secure software licensing and services, if the Priv joins the list of failed BlackBerry handsets that includes the all-touch Z10.
BlackBerry’s handset business has posted several consecutive money-losing quarters, in line with a collapse in the company’s global smartphone market share to less than 1 per cent, or about 25 million users.
The plunge is behind moves by Facebook and WhatsApp to drop support for BB10 after 2016, although Android OS devices will continue to receive updates to the social-media apps.
BlackBerry’s strategy calls for an end-to-end enterprise solution that includes smartphones and, in December, Chen said the division is nearing break-even.
But he also told the Code Mobile conference in the fall that hardware is in a do-or-die phase. He said the business needs to turn a profit this year: “Otherwise, I have to think twice about what I do there.”
Shares in the company jumped 10 per cent after release of the third-quarter financial report that showed revenue well above expectations, with software and services sales doubling on organic growth and acquisitions. Hardware revenue, however, dropped to $214 million (U.S.) from $361million a year earlier.
The consensus view of analysts surveyed by Bloomberg is for a modest sequential uptick in sales in the fourth quarter, to $559.47 million, with an adjusted loss of $48.4 million, or 9 cents per share.