BlackBerry (NASDAQ: BBRY) surprised most analysts Thursday by reporting a profit for its fiscal fourth quarter, the first one to include sales of its vitally important new smartphone, the BlackBerry Z10.
The Canadian company's share price ticked up about 8% in pre-market trading in New York, according to The Wall Street Journal.
Formerly known as Research in Motion, BlackBerry also revealed that it nevertheless lost about 3 million subscribers, dipping to 76 million. And it announced that co-founder Mike Lazaridis was leaving its board of directors.
For the quarter, BlackBerry shipped 6 million smartphones, of which 1 million were the recently announced Z10, running the entirely new BlackBerry 10 operating system. The new smartphone was only on sale for about one month during the quarter, in limited markets, including Canada and the U.K. It went on sale on the U.S. just last week, after the quarter ended on March 2.
Revenue for the quarter was $2.68 billion, down from $4.18 billion a year ago. Analysts overall expected $2.85 billion. Despite that, earnings were $98 million, or 19 cents a share; a year ago, the company reported a loss of $125 million, or 24 cents. Adjusted earnings were 22 cents a share, confounding the analysts' expectation of a loss of 29 cents a share.
Another bit of good news was that the company maintained its strong cash position of $2.9 billion. That cash pile could give BlackBerry the wherewithal to mount and sustain an aggressive marketing campaign for its new BB10 smartphones. The company said today that marketing costs for its new phones will increase 50% in the coming quarter. The all-touch Z10 is the first; next up is the Q10, which combines a smaller touch screen with the distinctive BlackBerry QWERTY keyboard.
Even though the new phones may sell well initially, due to a surge of existing BlackBerry users trading up to the new handsets, the question is whether the company can attract new users, most likely from among those moving from a voice-oriented feature phone to their first smartphone. RIM President and CEO Thorsten Heins has repeatedly said, without being specific, that the BlackBerry 10 operating system is aimed at a wide range of mobile applications, including embedded systems.
Though still far from its peak a few years ago, BlackBerry's stock has more than doubled in the past six months. "Still, only seven of 45 analysts who track the stock rate it a buy," according to a Bloomberg news story. "The gap between its current share price and analysts' average price target is the largest of any major company in Canada."
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