TORONTO: BlackBerry Ltd reported a smaller-than-expected loss as new chief executive John Chen slashed costs, but a 64 percent drop in revenue underscored the challenge Chen faces in turning around the struggling smartphone maker.
The Canadian company, which has lost most of the smartphone market to Apple Inc’s iPhone and gadgets powered by Google Inc’s Android operating system, has laid off thousands and agreed to sell most of its real estate.
Chen said he expects to be cash flow positive or neutral by the end of the current fiscal year, which runs to early March 2015. He does not expect to turn a profit until sometime in the following fiscal year. At a round table with media on Friday afternoon, Chen said he also does not expect revenue growth until some time that fiscal year. “John Chen did what John Chen is known for. He came in and he’s cut the cost base,” said BGC Partners technology analyst Colin Gillis, who noted the company’s “precipitous” revenue drop. “He’s buying himself some time.”
Research and development expenses fell 24 percent in the fourth quarter from a year earlier, while selling, marketing and administration costs dropped 35 percent. Morningstar analyst Brian Colello said BlackBerry’s operating expense reductions were encouraging, to a point.
“The big question still remains what BlackBerry can do on the demand side,” he said. “A lot of their moves have been supply related and internal, but we’re still looking for strong signs that demand is improving.” Under Chen, the company is focusing on its services arm, which manages mobile devices on the internal networks of big clients.Reuters
