BlacKberry lost three million customers in its most recent trading quarter, but shipped one million of its BB10 smartphones.
The Canadian manufacturer reported its full year results this morning, for the 12 months to 2 March. The business posted an operating profit of $94m on sales of $2.7bn. This was down 2% on its previous quarter but down 36% from its fourth quarter sales for 2011.
The smartphone maker's margins were fattened by the higher average selling price and margins of its newer BB10 devices, which went on sale in January in the UK. It said that during the quarter it shipped 6 million BlackBerry smartphones, including 1 million BB10 devices, as well as 370,000 of its PlayBook tablets. However, its subscriber base shrank from 79 million to 76 million.
BlackBerry said it was expecting to break even in its results for the first quarter of its 2014 financial year. It is upping its marketing spend by 50%, as it tries to establish BB10 in the United States. However, it said it has improved its cost base, sharpened up its supply chain and improved hardware margins.
Thorstein Heins, BlackBerry CEO, said: 'We have implemented numerous changes at BlackBerry over the past year and those changes have resulted in the Company returning to profitability in the fourth quarter. With the launch of BlackBerry 10, we have introduced the newest and what we believe to be the most innovative mobile computing platform in the market today. Customers love the device and the user experience, and our teams and partners are now focused on getting those devices into the hands of BlackBerry consumer and enterprise customers.
'As we go into our new fiscal year, we are excited with the opportunities for the BlackBerry 10 platform, and the commitments we are seeing from our global developers and partners. We are also excited about the new, dynamic culture at BlackBerry, where we are laser-focused on continuing to drive efficiency and improve the Company’s profitability while driving innovation. We have built an engine that is able to drive improved financial performance at lower volumes, which should allow us to generate additional benefits from higher volumes in the future.'
Elsewhere, the company announced co-founder Mike Lazaridis is stepping down as a director. He co-founded the business almost 30 years ago and the move is another break with BlackBerry's past. Last year, BlackBerry's other co-founder, Jim Balsillie, stepped down as a director and later sold his shares in the company.
Barbara Stymiest, chairman of BlackBerry's board of directors, said: 'We are grateful to Mike for his contributions to BlackBerry during the past three decades. Mike invented the BlackBerry and is widely recognized as one of Canada’s greatest innovators. Mike played a pivotal role for the past 15 months in helping with the leadership transition and the successful launch of BlackBerry 10.'
Jan Dawson, chief telecoms analyst at Ovum, said the results were 'a good start' for the BB10 platform. He added: 'The loss of three million subscribers is a worrying sign, however. BlackBerry's single biggest asset has been its large existing subscriber base, who are the most likely buyers of BlackBerry 10 devices, and the acceleration in the decline of that base reduces the size of the addressable market for BlackBerry 10. It's also a sign that the growth BlackBerry has seen in emerging markets is no longer enough to offset the rapid decline in mature markets, and it's unlikely that the company can reverse this trend long-term. As shipments have fallen, service revenues have become much more important, growing from 15% to 36% of BlackBerry's overall revenues over the past few years. The loss in subscribers means declining service revenues, which will put further pressure on margins, which have dropped in recent years too.
'Overall, there's some hope in these numbers, but also reasons for serious concern. BlackBerry absolutely has to execute in the next quarter in getting the Z10 available in sufficient numbers, launching the Q10, getting carriers to ramp up their marketing, and building momentum around BB10, if it's going to make a success of this new platform.'
Author: Graeme Neill