Wait until the next quarter's results to pass judgement on the success of BlackBerry 10
BlackBerry has announced better than expected fourth quarter and year end results for its fiscal year. However, there is still a long road ahead for the manufacturer if it intends to flourish.
BlackBerry reported financial results for the three months and fiscal year ended 2 March 2013 with revenue of $2.7 billion, down $49 million or 2% from the previous quarter. This quarter's adjusted income from continuing operations is $114 million, or $0.22 per diluted share. Gross margin hit 40%, driven by higher average selling prices and hardware margins.
The revenue breakdown for this quarter was approximately 61% for hardware, 36% for service and 3% for software and other revenue.
The company also announced shipments of six million smartphones, including approximately one million BlackBerry Z10 units, and approximately 370,000 BlackBerry PlayBook tablets.According to many, one million units of the Z10 was the magic number to hit for early sales of BlackBerry's iPhone rival, as the BlackBerry Z10 and Q10 devices have been plugged as the smartphones to pull BlackBerry back from the brink of extinction.
Jan Dawson, chief telecom analyst at Ovum, commented on sales of the Z10: 'This could have been a big quarter for BlackBerry, but several factors will work against device sales. Firstly, the device was only on sale for about a month before the end of the quarter, and critically didn't launch in the US until several weeks later. Secondly, the Q10, which has the classic BlackBerry hardware keyboard, won't go on sale for some time still, so many of the prime candidates for buying a BlackBerry 10 device will be waiting for that. Lastly, devices have been supply constrained in the markets where they have launched, meaning that even if people wanted to buy them they haven't necessarily been able to do so.
'For all these reasons, even though many observers will see this quarter's performance as a referendum on BlackBerry 10, they should instead wait for the next quarter's results, which will be a much better indicator of the long term success or failure of the platform. Given that context, anything more than a million Z10 sales in the past quarter may be considered a success for BlackBerry,' noted Dawson.
The Company will be increasing its marketing investment in the first quarter of fiscal 2014 in support of the global launch of BlackBerry 10. Including an anticipated 50% sequential increase in marketing spending, the company believes it will approach breakeven financial results in the first quarter based on its lower cost base, more efficient supply chain, and improved hardware margins.
'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,' said Thorsten Heins, President and CEO. '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.' Heins added, '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.'