BlackBerry reports $5.9bn net loss

Canadian smartphone maker BlackBerry reported a $5.9 billion net loss for its latest financial year, but registered a smaller-than-predicted loss of $423 million during its last quarter ending March 1st. In the previous quarter the company reported a loss of $4.4 billion.

John Chen, Executive Chairman and Chief Executive Officer of BlackBerry, said:

“I am very pleased with our progress and execution in fiscal Q4 against the strategy we laid out three months ago. We have significantly streamlined operations, allowing us to reach our expense reduction target one quarter ahead of schedule. BlackBerry is on sounder financial footing today with a path to returning to growth and profitability.”

BlackBerry smartphones have lost market share to telephones using the Google Android operating system and Apple’s iPhone.

BlackBerry latest quarterly revenue figures better than expected

Revenues for Q4 of fiscal 2014 declined to $976 million, which was $217 million or 18% less than $1.2 billion in the previous quarter and 64% lower than $2.7 billion in Q4 of fiscal 2013. However, latest revenue figures were better than market forecasts of approximately $1.1 billion.

In its company report, BlackBerry says it expects to maintain its strong cash position and continues to seek out opportunities to streamline operations. The company expects a break-even cash flow by the end of fiscal 2015.

The smaller quarterly loss has been attributed to production cost-cutting measures Chen has put in place.

John Chen’s strategy appears to be working

Chen took over as CEO in November, 2013. In December he signed a deal with Foxconn Technology Group to outsource some of BlackBerry’s design, production and distribution. In his quest to make the company leaner and more profitable he is reducing the workforce by one third.

BlackBerry shares on Friday rose 8.6% in early trading to $9.83, compared to $6.50 when Chen took over.

In an interview with Bloomberg, Michael Genovese, an analyst with MKM Partners LLC, said “They’re looking like they’ve successfully restructured this company for a better cost basis. But the next part after you do that is getting the revenue growth.” He has a neutral rating on the stock.”

The Q20 ‘Classic’ smartphone

Chen says BlackBerry will focus more on software and key clients and less on hardware and consumers. He has introduced the new Q20 “Classic” smartphone, which has a solid (physical) keyboard and the “menu, send & end” buttons – BlackBerry fans had complained when those features were gone.

Chen surprised many when he announced today that the company plans to re-launch production of the older BlackBerry 7 mobile phone because of strong demand worldwide. In November he appeared to write off that part of the business.

In December 2013, BlackBerry received a $696 million tax refund from the Canadian government. It expects another sizable refund by the end of August 2014. It has reached an agreement to sell most of its Canadian real estate, which is expected to bring in over $500 million.

At the end of the last quarter the company had $2.5 billion in cash and short-term investments, compared to $3.1 billion at the end of the prior quarter.

In the last quarter the company sold 3.4 million BlackBerrys to customers, cutting its inventory by 30%. Of those smartphone, 2.3 million were the older-style BlackBerry 7 models.

Getting BBM to make money

Blackberry is trying to find ways of monetizing and improving some of its existing products, such as its BBM messaging service, its enterprise sever services, and its QNX embedded software business.

According to Chen, there are 85 million monthly active BBM users. He added that one of BlackBerry’s priorities is to expand the user base. The company says it plans to launch an updated BBM system which will start generating revenue, initially through sponsored posts and stickers.