(Adds detail on cost cuts, cash position, background)
By Euan Rocha and Allison Martell
WATERLOO/TORONTO, June 19 (Reuters) - BlackBerry Ltd reported a smaller-than-expected quarterly loss on Thursday as the smartphone company's cost cutting and other turnaround efforts started to pay off.
Shares jumped 10 percent in trading before the bell after BlackBerry burned through less of its cash than many expected and reported its gross profit margin rose from a year earlier.
"The numbers certainly aren't great, but they could have been much worse," said Morningstar analyst Brian Colello.
Excluding special items, the company drew down $255 million in cash in the period, significantly less than the $784 million it used in the fiscal fourth quarter.
BlackBerry has been slashing costs and has more than halved its workforce over the last two years as part of a do-or-die attempt to turn its business around after losing ground to Apple Inc's iPhone and Samsung Electronics Co devices that run on Google Inc's Android system.
Last year it forged a partnership with FIH Mobile, the Hong Kong-listed unit of Taiwanese electronics company Foxconn Technology Co Ltd, to help design, manufacture and sell some of its devices.
As part of the deal it no longer pays the full upfront costs for parts used in its devices. Instead, Foxconn, the trading name of Hon Hai Precision Industry, takes a share of profits on each device in return for taking on the risk of inventory management.
Gross profit margin rose to 46.7 percent in the fiscal first quarter to May 31, from 33.9 percent a year earlier.
The Waterloo, Ontario-based company reported net income of $23 million, or 4 cents a share, compared with a loss of $84 million, or 16 cents, a year earlier.
Excluding a one-time non-cash accounting gain and certain restructuring charges, the loss was $60 million, or 11 cents a share.
Analysts, on average, had expected a loss of 25 cents a share, according to Thomson Reuters I/B/E/S. Quarterly revenue dropped to $966 million from $3.07 billion a year earlier.
Cash rose to $3.1 billion from $2.7 billion on a sequential basis, helped by gains from the sale of real estate assets and a tax refund.
BlackBerry's Nasdaq-listed shares rose 10.2 percent to $9.14 in premarket trading.
(Additional reporting by Alastair Sharp in Toronto; Editing by Franklin Paul and Sofina Mirza-Reid)