BlackBerry Earnings, Shipment Numbers Show Forward Progress

In the past week, BlackBerry launched its BlackBerry 10 platform and the first BlackBerry 10 device, the Z10, in the United States. The company reported its fourth quarter and year-end 2013 fiscal earnings, which showed a surprise return to profitability. It announced that global Z10 sales have topped 1 million devices since the official BlackBerry Z10 launch at the end of January, and that doesn’t include U.S. sales numbers. And the man who invented the very first BlackBerry, Mike Lazaridis, left the company for good when he stepped down from his seat on the BlackBerry board of directors.

To sum that all up, it was a big week for BlackBerry and one that showed a few steps, albeit small steps, in the right direction for the company that is desperately trying to regain some relevance–and market share–in the competitive mobile space.

First some more details on those earnings. I won’t get into too many specifics; if you want details, check out the BlackBerry release for yourself. But here are the most notable figures:

• Revenue for fiscal Q4 2013 was $98 million, or $0.19 per share diluted, compared to 2012 fiscal Q4 loss of including loss of $125 million, or $0.24 per share diluted.
• BlackBerry reported a current subscriber base of approximately 76 million, a loss of about 3 million users, which CEO Thorsten Heins attributed largely to the loss of prepaid customers.
• BlackBerry shipped 6 million smartphones, including approximately 1 million BlackBerry 10 units, in fiscal Q4.
• Sales are down 36 percent, to $2.68 billion, compared to a year ago.

And now some perspective:

BlackBerry earnings topped analysts’ average projections, which suggested the company’s shares would drop by 29 cents on revenue of $3.85 billion dollars, according to Thomson Reuters. But the companies is still bleeding subscribers, which isn’t exactly surprising given BlackBerry’s fall from grace during the past years and the fact that BlackBerry 10 has only been available for two months. The device was released less than a week ago in the United States.

Even in the best case scenario–BlackBerry Z10s fly off the shelves in the coming months and build momentum for the upcoming BlackBerry Q10 launch–it will still take some time for those gains in subscribers to balance out the considerable recent loses.

One million devices shipped to date is no small number, either. When you consider the fact that this sales figure doesn’t include U.S. sales because the device just went on sale in America last week, it’s even more impressive. In comparison, Samsung, one of the mobile market leaders along with Apple, said last November that it had some 5 million Galaxy Note II devices in the first two months after its launch. That’s a significantly larger number than the one million Z10s sold, but that’s global sales, and Samsung wasn’t facing the same negative market perception that BlackBerry is.

BlackBerry CEO Heins claims that 55 percent of new Z10 users are coming from other mobile platforms, which seems to suggest the Z10 and BlackBerry 10 are attracting users away from iOS and Android, at least to some extent. And loyal BlackBerry users who value the traditional BlackBerry keyboard are likely waiting for the release of the QWERTY-equipped Q10, so BlackBerry could see a notable boost in sales later this spring when that device hits store shelves.

Finally, Mr. BlackBerry himself, Mike Lazaridis said today that he will step down from the BlackBerry board of directors on May 1. Lazaridis is the man behind the first BlackBerry, and his departure signals the official end of an era for BlackBerry. Lazaridis’s former co-CEO Jim Balsillie relinquished his seat on the BlackBerry board almost exactly one year ago today, and he cut all official ties with the company last month when he sold off all of his BlackBerry stock.

In an interview with Lazaridis back in 2008, just as the iPhone was starting to present itself as a real BlackBerry competitor and before the company formerly known as Research In Motion (RIM) started the downward spiral it’s now trying to reverse, the then-CEO was brazenly bullish on how the iPhone would never replace the BlackBerry.

Despite a generally-negative outlook from investors and analysts, BlackBerry 10 appears to making forward progress, at least for the time being. And not everyone is negative.

Jack Gold, founder and principal analyst with J. Gold Associates, cautions that initial reports of slow BlackBerry 10 sales at U.S. wireless-carrier retail stores arent necessarily a good indicator or overall success or a lack thereof.

“BlackBerry still has a very significant install base in the enterprise. It remains to be seen [the platform can be successful],” Gold says. “I’m skeptical of [retail] sales numbers. Enterprises don’t buy in retail, first of all. So, you don’t see lines at AT&T stores. I think everyone expects the new BlackBerry to take off like a shot, like the Galaxy SIII, but I’m not sure that’s fair.”

As for the earnings announcement, Gold says:

“Given the expectations that most had, [BlackBerry] did quite well. They had a profit and more importantly increased their cash position. That means they have the capacity to invest in marketing the new devices.

“The loss of subscribers is troubling, of course, especially in a key market like the US. But the new devices really werent available yet to stem the losses. Its the next 1-2 quarters that will really tell the story of how well the devices are being received in the US.

“The bottom line is BlackBerry is certainly not dead yet, and I think its a mistake to count them out yet, even though they still face some significant hurdles to overcome.”

I agree with Gold, and said as much in my review of the BlackBerry Z10. The road to recovery will be a long one for BlackBerry; the Z10 is not some magic solution that will solve all of BlackBerrys problems. But BlackBerry appears to be on the right track. The release this year of the BlackBerry Q10 and a number of lower-end devices aimed at emerging markets could provide some further momentum.

AS

Al Sacco covers Mobile and Wireless for CIO.com. Follow Al on Twitter @ASacco. Follow everything from CIO.com on Twitter @CIOonline, Facebook, Google + and LinkedIn.