Canadian manufacturer’s revenue almost halved year-on-year to $490 million for three months ending August 29
BlackBerry has announced plans to release a new Android Smartphone after posting losses of $66 million (£43 million) in its latest quarterly financial results.
The Canadian manufacturer has long been rumoured to be ditching its BlackBerry OS in favour of the Google operating system, and today confirmed plans to create an Android device that will be called the BlackBerry Priv.
BlackBerry CEO and chairman John Chen said the device, which was hinted at Mobile World Congress in March, will be released later this year.
While the new device will provide a choice in operating systems to new and existing customers, the company said it remains committed to its own BlackBerry 10.
Chen said: “At the same time, we are focused on making faster progress to achieve profitability in our handset business. Today, I am confirming our plans to launch Priv, an Android device named after BlackBerry’s heritage and core mission of protecting our customers’ privacy.
“Priv combines the best of BlackBerry security and productivity with the expansive mobile application ecosystem available on the Android platform.”
Losses and revenue
It comes as the firm posted Q2 non-GAAP losses of $66 million for the three months ending August 29. Including the impact of non-cash gain, it posted a net profit of $51 million (£33 million), compared with a loss of $207 million (£136 million) for the same quarter last year.
Revenue fell 46.5 percent to $490 million in the quarter, well below Reuters expectation of $610.6 million.
The firm said it recognised hardware sales of over 800,000 BlackBerry smartphones with an average selling price of $240. Hardware made up 41 per cent of BlackBerry’s revenue for the quarter. This compares with 1.1 million smartphone sales in Q1 – 40 per cent of revenue
BlackBerry has added to its software and services customer base by acquiring AtHoc for $250 million, and Good Technology for $425 million. However, this side of the business still only accounts for 15 per cent of the Canadian firm’s revenue.
“I am confident in our strategy and continued progress, highlighted by our fourth consecutive quarter of year-over-year double digit growth in software licensing revenue and sixth consecutive quarter of positive free cash flow,” Chen added.
“In order to expand our leadership in crossplatform software and services, we are investing strategically – organically through new products and services based on the BES platform, and through acquisitions like AtHoc and Good.”
CityIndex senior market analyst Ken Odeluga: “Investors are valuing BlackBerry’s operations at essentially zero. Consider that the company’s market capitalisation is $3.6B. But its cash reserves were $3.35B as of its fiscal second quarter. What is that telling us?
That suggests investors have yet to agree with BlackBerry’s push to quietly fade itself out of the mass-market handset business and to ramp-up its services side.
“Whilst the overall tone of these figures and operational updates is by no means poor, the crucial “software-and-services” revenues were $74 million last quarter, 19 per cent more than a year ago.
“But note “software-and-services” appears to have morphed from a line in BlackBerry’s Q1report titled “software and technology-licensing revenue”, which showed a $137 million result back then. The slight fudge and actual decline are likely to prompt slightly harder selling of the shares later in the day.”