BlackBerry sold 1 million of its new Z10 handsets in the first month on the market as the company recorded a before tax profit of $94 million in the fourth quarter, the company said Friday in its latest financial results.
However, it also admitted that it only sold 5 million handsets running the older BB 6 and 7 operating system in the three months ending March 31 for a total of 6 million handsets, way under the expectation 7.1 million of most financial analysts.
The numbers indicate how low demand for the older handsets is dropping and the possible brighter future for the company once it expands the number of countries it will sell the next-generation handsets running the new BB 10 operating system.
The touch-screen Z10 only started selling in the U.S. on March 22. Meanwhile the keypad Q10 version is expected to start selling only next month.
The good news in today’s financial results is that BlackBerry [TSX: BB] has $2.9 billion in cash, money it can use for marketing the Z10/Q10.
In the fourth quarter the company eked out a $94 million profit on revenue of $2.7 billion. But note that revenue was down slightly from the third quarter and plunged 36 per cent from the $4.7 period it pulled in during same period a year ago.
(The soon-to-be released Q10)
The company also said that co-founder Mike Lazaridis is retiring as vice-chair. Lazaridis was the last link to BlackBerry’s once glorious past when it dominated smart phone sales around the world. Lazaridis is turning his attention to Quantum Valley Investments, trying to commercialize research in quantum computing with Research In Motion co-founder Doug Fregin.
“With the launch of BlackBerry 10, I believe I have fulfilled my commitment to the board,” Lazaridis said in a statement. CEO Thorsten Heins and his team “did an excellent job in completing BlackBerry 10. We have a great deal of which to be proud. I believe I am leaving the company in good hands. I remain a huge fan of BlackBerry and, of course, wish the company and its people well.”
Speaking to financial analysts, Heins (pictured above), paid tribute to Lazaridis, saying he revolutionized the communications industry and is widely recognized as one of Canada’s greatest innovators. “Mike has played a pivotal role in the last 15 months in helping with the leadership transition and with the successful launch of Blackberry 10,” Heins said, adding he is grateful for the advice Lazaridis has given him since becoming CEO 15 months ago.
In his remarks to analysts, Heins was proud with the financial results, noting that the company scored an operating profit before taxes despite a 23 per cent drop in handsets shipped over the year. He attributed this to a sharp-knife cost cutting exercise. But the result, he said, is BlackBerry is well positioned for the future.
That future includes the release of the Q10 as well as two lower-priced versions of the Z10. At least one of those will be for emerging markets like Africa and Latin America. But there will also be an entry-level model. It wasn’t clear if that will be sold in Canada and the U.S.
Heins portrayed the roll-out of the BB10 devices as more than a quick turn-around the for company but something that will evolve as new products and services are released. He turned aside questions about whether demand for the Z10, which isn’t available in many countries yet, is being stimulated by enterprises or consumers.
He did note that 223 carriers have finished technical trials. Of those 60 carriers have launched the Z10 in more than 40 countries, with 30 countries to come. Forty carriers in 20 countries are testing the Q10, expected to be a hot seller among those who insist on a BlackBerry with a physical keyboard.
In the fourth quarter BlackBerry had a profit from continuing operation of $94 million before taxes, but a loss of $18 million after taxes.
