BlackBerry announces mixed Q4 results as its struggle continues (Part 1 of 5)
BlackBerry produce mixed Q4 results
BlackBerry (BBRY) recently reported Q4 and fiscal year end 2014 results. Its revenues of $976 million were below expectations of $1.1 billion, while its adjusted EPS of -$0.08 per share were better than the consensus estimate of -$0.56 per share. This goes to show that the company is focusing on cutting down its operating expenses, even though it continues to struggle in the smartphone market. Although the company was able to cut down on its operating expenses by 30% in the fourth quarter compared to the previous quarter, it sold only 1.3 million BlackBerry handheld devices in the fourth quarter compared to 1.9 million in the previous quarter. No wonder BlackBerry is struggling in an otherwise booming smartphone market.
The struggle in the smartphone market continues for BlackBerry
As the above graph shows, Google’s (GOOG) Android operating system continues to steal the limelight, with a share of 79% in the smartphone operating system market, while Apple’s (AAPL) iOS comes in second at 15%, Microsoft’s (MSFT) Windows Phone comes in third at 3.3% and BlackBerry’s fourth at 1.9% market share. The overall smartphone market continues to grow, with total smartphone shipments increasing from 725 million in 2012 to over 1 billion in 2013. According to IDC, Samsung (SSNLF) topped the list of smartphone vendors, with a market share of 31% in 2013.
BlackBerry’s now betting on new products for future growth
BlackBerry plans to expand its Z3 smartphone to other regions, Southeast Asia and India, at an attractive price of less than $300. The company also plans to launch another smartphone named “Classic” by the end of fiscal year 2015. BlackBerry has high hopes for these smartphones, which John Chen, the CEO of the company, duly mentioned during the conference call to announce the earnings.
BlackBerry’s also trying to revamp BBM service
The company also had some important announcements related to its messaging platform, popularly known as BBM or the BlackBerry Messenger service. The company announced that BBM would be available on Windows phones, adding to its support of iOS and Android platforms. Recently, BlackBerry launched BBM 2.0, which included several new features such as location services, Dropbox integration and voice and channel for cross-platform users.
BlackBerry’s not looking to break even before fiscal year 2016
Despite introducing new products, the company expects to reach profitability only in fiscal 2016 and reach cash flow break-even by the end of fiscal year 2015. The company also expects revenues to decline by around 20% in the first quarter of fiscal 2015 compared to the fourth quarter of fiscal year 2014. This means a reversal of the company’s fortunes will take time, and the struggle for BlackBerry’s survival continues
Browse this series on Market Realist: