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BlackBerry posts first-quarter profit

Blackberry CEO Thorsten Heins will leave the firm as a result of the transaction with Fairfax Financial Holdings

Canadian device maker BlackBerry is showing signs of stability after posting a $94m GAAP profit for 1Q13, representing an almost seven-fold increase on the $14m posted in the previous quarter, and up from the $118m loss it posted in the same quarter last year.

The firm said it shipped one million BlackBerry Z10 devices – its new flagship handset – despite losing three million subscribers in the quarter. President and CEO Thorsten Heins reportedly plans to follow up the firm’s relative success by launching a range of low-end BlackBerry 10 smartphone devices in the near future.

“We have implemented numerous changes at BlackBerry over the past year and those changes have resulted in the company returning to profitability in the fourth quarter,” said Heins.

“With the launch of BlackBerry 10, we have introduced the newest and what we believe to be the most innovative mobile computing platform in the market today. Customers love the device and the user experience, and our teams and partners are now focused on getting those devices into the hands of BlackBerry consumer and enterprise customers.”

Jan Dawson, chief telecoms analyst at research firm Ovum said that the million devices sold is a sign that BlackBerry achieved “decent if not stellar traction” in the quarter for its new devices.

“Given the supply constraints, late launch in the US and the decision to launch the Q10 later, this is a good start for the platform,” he said, adding that the next quarter will provide a much better basis for judging BlackBerry long term. He said that the loss of three million subscribers is a worrying sign, however.

“BlackBerry’s single biggest asset has been its large existing subscriber base, who are the most likely buyers of BlackBerry 10 devices, and the acceleration in the decline of that base reduces the size of the addressable market for BlackBerry 10,” said Dawson.

“It’s also a sign that the growth BlackBerry has seen in emerging markets is no longer enough to offset the rapid decline in mature markets, and it’s unlikely that the company can reverse this trend long-term.”

According to Geoff Blaber, director of devices & platforms at research firm CCS Insight, BlackBerry’s results show signs of promise and concern in equal measure.

“The Blackberry Z10 has made a positive start and claims it is appealing to individuals who had previously favoured Apple and Android devices suggest it speaks to those looking for something different rather than being confined to the existing BlackBerry user base,” he said.

Blaber added that the device’s success will be measured by how it performs in the US, arguing that a good reception in that market is not only critical to BlackBerry’s profit margins, but key to reversing the tide of investor sentiment and maintaining momentum with developers.

“Given this, we’d expect Blackberry to be investing a substantial proportion of its increased marketing budget in the US as it seeks to stabilise subscriber losses and reassert its position in the congested smartphone market,” Blaber added.

Meanwhile, Heins hinted that the firm will now shift its attention to lower-cost smartphones, in an interview with The Canadian Press.

“In order to stay relevant, we have to build a portfolio,” he said. “We will bring it out at the moment when we can expect the biggest market attention for these products.”

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