BlackBerry posts Q3 profit but revenue dip “not satisfying”

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Revenue falls by £79.24 million ($124 million) from $916 million in Q2 to $793 million in Q3 as manufacturing woes impact sales

BlackBerry is cash flow positive for the first time in two years but CEO John Chen said a $124 million fall in quarterly profit was “not satisfying”.

Revenue for the Canadian manufacturer fell by £79 million ($124 million) to £506 million ($793 million) in its third quarter, which ended November 30. The previous quarter, up to August 30, BlackBerry had posted revenues of £585 million ($916 million).

The company posted a net loss of £94.5 million ($148 million) for its Q3 financial results for the three months up to November 30, compared with a $4.4 billion loss in the same quarter the previous year. However, the Canadian manufacturer posted a £3.8 million ($6 million) profit if adjusted to exclude restructuring.

Chen had set out plans to make BlackBerry cash flow neutral by February and during an investor call, he said he was pleased to announce a positive cash flow of £27.5 ($43 million) for the quarter. In Q2, BlackBerry had a negative cash flow of £23 million ($36 million), meaning Chen had hit his goal early.

On the call, Chen said: “We are pleased with the management of our finances and will look to remain cash flow positive. But our revenue is not satisfying, so now we’re turning our intentions to improving revenue.

“To see revenue growth, we’re going to need a couple of quarters. These are transition quarters for us, in terms of revenue, as we launch new devices like the BlackBerry Classic and our investments gain traction.

“We achieved a key milestone in our eight quarter plan with positive cash flow. We also attained another important milestone in the release of our new enterprise software products and devices. Our focus now turns to expanding our distribution and driving revenue growth.”

Hardware revenue down

BlackBerry did not disclose how many of its Passport handsets, which was launched in September, had sold during the quarter but Chen did reveal that it had sold 2 million handsets in the period. Hardware revenue was down to $365 million, a 12 per cent from the previous quarter. BlackBerry-Passport

On the investor call, Chen said that BlackBerry had reduced the manufacturing process to four to six weeks but had still ran out of stock several times in the quarter, which hindered sales. Problems with stocking levels meant BlackBerry was only able to fulfil the backlog of Passport sales by December 12.

BlackBerry did not disclose figures for pre-orders on its BlackBerry Classic device, which was launched on Wednesday (December 17), but Chen said it had been “well received.”

BlackBerry’s lucrative services business continued its steep decline, bringing in revenue of about $365-million, 14 per cent below the last quarter.

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