CEO Chen says that BlackBerry is getting the most retail support from carriers it's seen in years, but it's still struggling to turn around both its hardware and software businesses.

Sarah Thomas, Director, Women in Comms

March 27, 2015

3 Min Read
Carriers Are Bright Spot in BlackBerry Q4

The good news for BlackBerry is that it's experiencing the best carrier retail support it's seen in a number of years, helping it pull off a profit in the fourth quarter. The bad news is that it's still struggling to gain traction for both its handsets and its more promising software business.

The Canadian company reported earnings on Friday, including a net profit of $28 million. It was BlackBerry 's second quarterly profit in a row, but it was the result of cost-cutting measures and patent sales rather than an uptick in device sales. The carrier earned $660 million in the fourth quarter, down 32% from $976 million a year ago and a far cry from the $2.7 billion in revenues it brought in two years ago. (See BlackBerry Q4 Sales Sink to Sub-$1B.)

Speaking on BlackBerry's earnings call, ever-optimistic CEO John Chen talked up carrier support in the quarter, calling it a bright spot, and noting that the carriers have been receptive to the handset maker's success. It has 160 carriers in 86 countries and 7,000 retail outlets now selling its devices, 90% of which are the newest generation handsets like the Leap, Passport and Classic. Chen said this is the best retail support BlackBerry's seen in years, and admitted these relationships have been "slightly broken" in the past, a nod to the company's very public fight with T-Mobile US Inc. (See T-Mobile, BlackBerry Flirt With Reuniting, BlackBerry's Chen Lashes Out at T-Mobile Offer and BlackBerry Shakes Up Its C-Level.)

"The carriers are a bright spot. We’re pleasantly surprised that they are very receptive to BlackBerry being successful and doing business with us," Chen said, adding that BlackBerry's SIM-based licensing, while a change for the carriers, is getting easier for carriers to resell their product and put in their phone bill. "It all came back to whether your product make senses and they can make money out of it, so we can help each other there," he added. (See BlackBerry Kills T-Mobile Licensing Deal.)

For more news and information on smartphones visit the dedicated mobile devices content channel here on Light Reading.

BlackBerry managed to increase its software sales 19% from the previous year to $67 million, driven primarily by its BES12 mobile device management product and its QNX operating system, popular in the Internet of Things. Chen said he wants to more than double its software revenues in 2015 to $600 million, up from $250 million in the past fiscal year. He also talked up BlackBerry's partnership with rumored potential suitor Samsung Corp. for helping to grow its presence in enterprise security. (See Should Samsung Buy BlackBerry?)

BlackBerry shipped 1.3 million smartphones in the fourth quarter, down from 1.9 million in the previous quarter, which was a steep fall from the 4.3 million it shipped in the third quarter of 2013. It did, however, increase its average selling price to $208, up from $180 in the previous quarter.

For the most part, analysts are not buying Chen's optimism for further improvement in 2015. BlackBerry would have posted a loss in the fourth quarter if it weren't for its $115 million sale of patents, and it still has a lot of work to do to improve its standings in both hardware and software, where it's shifting its resources and where analysts have generally seen the most potential. (See Rockstar Group Unloads Patents for $900M, BlackBerry's Passport to Success Is Services and Time to Flip BlackBerry's Handset Kill Switch.)

Even so, BlackBerry was trading up, 2.47%, or .23 points, to $9.53, on Friday afternoon, driven by its surprise fourth quarter profit.

— Sarah Thomas, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editorial Operations Director, Light Reading

About the Author(s)

Sarah Thomas

Director, Women in Comms

Sarah Thomas's love affair with communications began in 2003 when she bought her first cellphone, a pink RAZR, which she duly "bedazzled" with the help of superglue and her dad.

She joined the editorial staff at Light Reading in 2010 and has been covering mobile technologies ever since. Sarah got her start covering telecom in 2007 at Telephony, later Connected Planet, may it rest in peace. Her non-telecom work experience includes a brief foray into public relations at Fleishman-Hillard (her cussin' upset the clients) and a hodge-podge of internships, including spells at Ingram's (Kansas City's business magazine), American Spa magazine (where she was Chief Hot-Tub Correspondent), and the tweens' quiz bible, QuizFest, in NYC.

As Editorial Operations Director, a role she took on in January 2015, Sarah is responsible for the day-to-day management of the non-news content elements on Light Reading.

Sarah received her Bachelor's in Journalism from the University of Missouri-Columbia. She lives in Chicago with her 3DTV, her iPad and a drawer full of smartphone cords.

Away from the world of telecom journalism, Sarah likes to dabble in monster truck racing, becoming part of Team Bigfoot in 2009.

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