Toronto: Blackberry surprised Wall Street by posting results that beat analyst's expectations. Shares rose 10 per cent in premarket trading as CEO John Chen cut expenses quicker than expected.
The embattled smartphone company reported net income of $23 million, or 4 cents per share, for the three months ended May 31. It had reported a loss of $84 million, or 16 cents per share, a year ago.
Excluding unusual items, its adjusted loss was 11 cents per share in the latest period. Analysts surveyed by FactSet expected a loss of 35 cents per share.
Revenue fell to $966 million compared with $3.07 billion a year ago. Analysts expected $961.7 million.
Shares are up 10.4 percent to $9.15 in premarket trading.
"We are getting very close to making money or at least break even on hardware. Not quite there yet, but close," Chen said on a conference call with analysts
It is the third quarterly results under Chen, who is deemphasising the hardware business after last year's launch of the BlackBerry 10 failed to spark a turnaround. The BlackBerry has been hammered by competition from the iPhone as well as Android-based rival
"He's doing exactly what John Chen should be doing. He's right sizing the business to fit demand. He is focused in the areas where he is still relevant. He's cut partnerships to shore up weaknesses," said Colin Gillis, an analyst at BGC Partners. "If they can get this business where they are selling a million phones a month they'll be a nice little niche. It will be a nice little profitable business."
BlackBerry sold 2.6 phones in the quarter and reported cash and investments of $3.1 billion.
Chen, who is credited with turning around Sybase, a data company that was sold to SAP in 2010, is putting more emphasis on BlackBerry's mobile device management business, a collection of software that allows IT departments to manage different devices connected to their corporate networks. He is also emphasizing BlackBerry's popular BlackBerry Messenger application that is now also available on Apple and Android devices. And he is trying to highlight Blackberry's embedded QNX software systems, which are used in-vehicle infotainment systems and industrial machines.
BlackBerry announced Wednesday that it is adding the Amazon Appstore to its phones. That will give users of the BlackBerry 10.3 operating system easy access to thousands more of the most popular Android apps and games. The struggling smartphone maker has been criticised for the lack of applications available for its devices.
BlackBerry announced last December that it's entering into a five-year partnership with Foxconn, the Taiwanese company that assembles products in vast factories in China. Foxconn, known for its manufacturing contract work on Apple's iPhones and iPads, will jointly design and manufacture most BlackBerry devices and manage inventory of the devices in an agreement that will offload much of BlackBerry's manufacturing costs. Chen has said for months that he'll be happy to break even or make a small profit on the device business.
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