For the past year BlackBerry has been trying to prove to the world that it’s not a mobile has-been just yet, and that all came to a head earlier this year when the company finally released the BlackBerry 10 mobile OS to the masses. While the company’s future is still unclear, BlackBerry released its fiscal Q4 2013 earnings early this morning and they’re more impressive than you would expect for a company going through some major upheavals.
BlackBerry reported earnings of $0.22 per share on $2.7 billion in revenue — that works out to an adjusted net income of $114 million. That may not seem great at first glance, but bear in mind the rough patch that the company has been going through (not to mention the lowered forecasts that come with it). Wall Street’s expectations for the ailing Canadian company were pretty grim — the consensus according to Bloomberg Businessweek forecasted a loss of $0.28 per share on revenues of $2.8 billion. In case you haven’t been keeping track, that’s still down significantly from the $0.80 EPS and $4.6 billion in revenue that BlackBerry (still RIM at the time) reported in the year-ago quarter but BlackBerry handily beat those low expectations and then some.
As such, it’s not much of a surprise to see that BlackBerry’s stock price is up roughly 5% in pre-market trading at time of writing, and BlackBerry is eagerly stoking that enthusiasm by noting that the company will “approach breakeven financial results” next quarter.
Perhaps more importantly, this earnings release gives us our first real glimpse at how the company’s new BlackBerry 10 smartphone is faring after its launch earlier this year. According to BlackBerry, the company has shipped a total of 6 million smartphones this past quarter with roughly 1 million of those being newer, higher-margin Z10 units.
To be clear, BlackBerry isn’t out of the woods yet. This time around, the company reported that its subscriber base was holding steady at 76 million, down from the 79 million reported last December. There’s no official reason given, but a dearth of new BlackBerry 7 hardware in the months leading up to the BlackBerry 10 launch is a likely culprit — those lower-cost devices are still the bread and butter of BlackBerry’s business, and a shift in focus towards more expensive BB10 units probably stymied growth. BlackBerry needs to figure out how to bring BlackBerry 10 to the masses in a big way, lest it yield its hard-fought position to a sea of cheap Android phones. Shipments are down 38% year-over-year, as is the company’s research and development spending.
The bigger question at play here is about how much stock we should be putting in this particular release. After all, the thing to remember here is that BlackBerry is right smack in the middle of a tremendous transition period. Since the company’s last earnings release BlackBerry has been awfully busy launching its next generation mobile OS and the smartphone that runs it in markets across the globe. Its going to be the next few earnings release that paint a better picture of BlackBerry’s odds of survival in the long term, but hey — this isn’t a bad start.
This earnings release also marks the end of an era — former RIM co-CEO Mike Lazaridis has announced that he will step down as Vice Chair and Director of the company, presumably to spend more time managing his $100 quantum computing venture capital fund. His longtime partner Jim Balsillie finally severed his own ties by dumping his stake in BlackBerry this past February.