& cplSiteName &

Carriers Are Bright Spot in BlackBerry Q4

Sarah Thomas
3/27/2015

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

(11)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 2   >   >>
Kruz
Kruz
3/30/2015 | 2:12:57 PM
Re: hardware v. software
This optimism is just an effort to portray BB as a fit for a takeover. BB's devices units is bleeding, loosing roughly 4 millions subs per quarter and nothing looks as if it was about to change. BB looks on its way to become the next Nokia, with much nostalgic fans. It is paying the price of failing to innovate for years in the device sector and also failing to understand what people want went it had it all.
sarahthomas1011
sarahthomas1011
3/30/2015 | 1:42:11 PM
Re: hardware v. software
But if they are the BlackBerry faithful, do they really care about having thousands of apps to choose from? I'd argue they are using the phone just for its core features like email and the security it has baked in.
danielcawrey
danielcawrey
3/30/2015 | 1:20:59 PM
Re: hardware v. software
I believe BlackBerry will always have a place being a niche product. 

That being said, I do not think the company's devices are going to become some huge mainstream hit in the near future. I think that time has really passed. Unless, of course, if BlackBerry can figure out how to get a LOT more third party developers using their platform. 
sarahthomas1011
sarahthomas1011
3/30/2015 | 11:56:35 AM
Re: hardware v. software
I definitely agree that there's a niche that still loves BlackBerry, but it continues to shrink. Even if people still love the smartphones, I see a lot looking elsewhere for fear of future support or after having read too many bad reviews and negative projections. MKM says it has to sell 10 million phones each year to break-even in hardware -- even with its manufacturing outsourced, that'll be hard to do.

 
sarahthomas1011
sarahthomas1011
3/30/2015 | 11:53:35 AM
optimistic or unrealistic?
MKM Research put out a note today, reiterating the sentiment that Chen is being a little too optimistic in his forecasts. It notes that service revenues are expected to decline around 1% per quarter throughout 2016, which will offset any growth in software. In today's competitive landscape, Chen may end up regretting sticking to BlackBerry's $600 software target.
f_goldstein
f_goldstein
3/30/2015 | 11:13:09 AM
Re: hardware v. software
BB has already arranged for Foxconn to handle its manufacturing, so there's not as much cost in remaining in that business as there used to be.  They have a niche market where their hardware is unexcelled, and the Apple-copying sycophants have given up keyboards in favor of More TeeVee, as if the whole market were kids.  I may buy a Classic myself this week -- it's in the Verizon stores now. But if I wait a little while I'll get a choice of professional-looking colors (white and gray, besides black).  I've never had a Blackberry before but they have a ready market for us fondleslab-haters.
Mitch Wagner
Mitch Wagner
3/30/2015 | 10:58:11 AM
Re: hardware v. software
SachinEE - BlackBerry still has a lot of fans, but their IT departments are cutting them off. 
Phil_Britt
Phil_Britt
3/30/2015 | 8:32:35 AM
Re: hardware v. software
Mitch Wagner,

You are absolutely right. The hardware will continue to drain the company's revenue. If the bleeding doesn't stop soon enough, the brief transfusion from the last quarter won't be enough to save the company.
SachinEE
SachinEE
3/29/2015 | 3:37:15 PM
Re: hardware v. software
@mitch: This really is the case. Blackberry Passport really tried to bring momentum into this game but it failed, however, still now I favour a BB over any i-product or android.
Mitch Wagner
Mitch Wagner
3/27/2015 | 3:35:46 PM
Re: hardware v. software
There's no future for BlackBerry in handset sales. It needs to exit out of that business as fast as it can. 

Either that or become an Android-only provider. 
Page 1 / 2   >   >>
Featured Video
Upcoming Live Events
November 5, 2019, London, England
November 7, 2019, London, UK
November 14, 2019, Maritim Hotel, Berlin
December 3-5, 2019, Vienna, Austria
December 3, 2019, New York, New York
March 16-18, 2020, Embassy Suites, Denver, Colorado
May 18-20, 2020, Irving Convention Center, Dallas, TX
All Upcoming Live Events