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 Channel Futures

Mobility


BlackBerry’s Excellent Week: Q4 Pares Losses, DoD Nods

  • Written by DH Kass 1
  • March 31, 2014

BlackBerry (BBRY) topped off an eventful few days last week with a Q4 2014 performance the device maker said confirmed that its cost-savings moves and “significantly streamlined” operations would ultimately return it to profitability.

BlackBerry (BBRY) topped off an eventful few days last week with a Q4 2014 performance the device maker said confirmed that its cost-savings moves and “significantly streamlined” operations would ultimately return it to profitability.

While the company pared its losses for the period to $423 million, or 80 per share, on a 64 percent drop in sales to $976 million—below analysts’ expectations—from the same period a year ago, chief executive John Chen said the company is proceeding according to plan.

"I am very pleased with our progress and execution in fiscal Q4 against the strategy we laid out three months ago. We have significantly streamlined operations, allowing us to reach our expense reduction target one quarter ahead of schedule," said Chen. "BlackBerry is on sounder financial footing today with a path to returning to growth and profitability."

Still, it’s difficult to tell if Chen is speaking of the new normal in which companies claim fewer losses as victories or he’s saying the vendor’s massive restructuring is taking root. In Q4 last year, BlackBerry earned $94 million, or 18 cents per share but in its Q3 2014 BlackBerry reported a whopping $4.4 billion, or $8.37 per share, loss.

Perhaps he’s speaking of the company’s 30 percent reduction in channel inventory for the quarter, the 51 percent decline in operating expenses from the beginning of its 2014 fiscal year and the $2.7 billion in its cash storehouse.

The device maker’s revenue breakdown for the period showed 37 percent of its sales coming from hardware, 56 percent from services and 7 percent from software and other sources. For the quarter, the hardware numbers were generated from recognized unit sales of 1.3 million smartphones, down from the 1.9 million the vendor officially counted in the immediately prior quarter. And, BlackBerry’s still struggling to sell its newer smartphones, with 2.3 million BlackBerry 7’s accounting for the overall 3.4 million units that ended up in customers’ hands in the quarter.

For the 2014 fiscal year ended March 1, BlackBerry’s sales slid 38 percent to $6.8 billion compared to FY 2013, and the vendor lost $5.9 billion, or $11.18 per share, compared to a $628 million or $1.20 per share loss the prior year. BlackBerry said that it will continue to cut costs expects to maintain its cash position going forward. It is sticking to a break-even cash flow target of the end of its 2015 fiscal year.

Two more wins, one loss

There was more to BlackBerry’s week than just its Q4 financials. It also gained an important DoD security clearance that could significantly boost sales of its BlackBerry 10 smartphone. The vendor secured the Full Operational Capability (FOC) nod to run on U.S. Department of Defense (DoD) networks from the U.S. Defense Information Systems Agency (DISA) for the BlackBerry 10 platform.

The designation, which adds to the vendor’s Authority to Operate (ATO) certification, allows BlackBerry 10 government users to deploy the vendor’s Enterprise Service 10 (BES10) to access email, data, apps and other DoD network resources. BlackBerry said it is the only vendor sporting the FOC tag. The granting of FOC completes BlackBerry’s security certification process with the DoD.

In addition, BlackBerry won a preliminary injunction against Typo Products, prohibiting the Ryan Seacrest-backed vendor from selling a $99 iPhone case, based on a U.S. District Judge in San Francisco’s ruling the device maker’s patents had been violated. The injunction bans Typo from selling its keyboard that can be attached to some of Apple’s (AAPL) iPhones.

BlackBerry’s lone loss for the week occurred when Apple hired away Sebastien Marineau-Mes, BlackBerry's software senior vice president.

Well, technically, Apple, which first offered Marineau-Mes a job in September 2103 as its Core OS vice president, has sort of hired him. BlackBerry promoted the software engineer to Platform Development executive vice president at the same time as Apple offered him a new job. The promotion required Marineau-Mes to advise BlackBerry six months ahead of time should he want to jump ship. When Marineau-Mes accepted Apple's offer, BlackBerry took him to court, which subsequently agreed his six-month obligation was binding.

"BlackBerry will not stand by while a former employee violates his employment contract,” the company said in a statement. “It is unfortunate that we had to take this step, but we will do whatever is necessary to ensure that employees honor the agreements they make with us.”

It’s not clear if Apple will wait out the delay until June for Marineau-Mes to take his new post or look elsewhere.

Tags: Cloud Service Providers Digital Service Providers MSPs VARs/SIs Mobility

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