Canadian Manufacturing

Blackberry misses result estimates, CEO John Chen ‘not satisfied’

Company reveals plans to launch android smartphone as revenue falls short

WATERLOO, Ont.—BlackBerry missed already low expectations for its second quarter as the technology company showed it’s still struggling with its turnaround plan.

The Canadian smartphone company reported US$51 million of net income for the three months ended Aug. 29, which was an improvement on the net loss of US$207 million a year ago, and positive cash flow.

But it fell short of adjusted expectations with a posted loss of US$66 million or 13 cents per share – deeper than the nine cents per share that had been estimated.

Revenue dropped 46 per cent to US$490 million, which was well below analyst estimates of US$611 million.

“I’m not satisfied (with) … where we are in the overall revenue and profitability, especially the performance of our handset business,” chief executive John Chen told analysts during a conference call on Friday.

BlackBerry also revealed plans for the BlackBerry Priv – named after the privacy of its high-level security technology – as its first smartphone that will be able to run on the Android operating system as well as its own BlackBerry 10 operating system.

Despite calls from some analysts for BlackBerry to scrap its own operating system, the company said it doesn’t plan to make those sweeping changes – at least for now.

“There is a very loyal base in BB10, especially the government, and some highly regulated industry customers, so we will have to see whether we can make money on that base,” Chen said.

“If our plan of doing the BlackBerry-Android type of implementation works well, and the security side of the equation is well accepted by the government and this space, of course we could then replace or merge them.”

Chen has focused on reworking the company’s priorities since he joined in November 2013, with tight cost management and cheaper smartphone production being two major priorities.

Strengthening software licensing and services revenues has been another objective under Chen’s leadership. He said revenues for that part of its business grew 19 per cent to $74 milllion during the quarter.

The company also anticipates returning to profitability in the fiscal fourth quarter, it said.

Analysts had set the bar low for the second quarter report.

The Waterloo, Ont.-based company has issued widespread layoff notices to its workforce this summer.

Over the past few weeks, those reductions have centred on deep cuts to its hardware development and manufacturing business as it puts a lower priority on smartphone development, according to two sources who were familiar with the cuts.

Some of those employees have been told they will lose their jobs in November, one of the sources close to the matter said.

The sources both say hundreds of additional jobs have been quietly shed over the summer, affecting offices in Ottawa and BlackBerry headquarters in Waterloo, in particular. More recent cuts have also impacted BlackBerry manufacturing facilities in Cambridge, Ont.

The company, which confirmed some job reductions earlier this summer but refused to disclose numbers, declined late Thursday to say how many jobs were part of more recent cuts.

BlackBerry said it had 6,225 full-time global employees as of Feb. 28, its most recent filing with regulators, but though those employee numbers are likely much lower after various other waves of cuts throughout its international operations this year.

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