BlackBerry's third-quarter loss smaller than forecast

TORONTO • BlackBerry reported a narrower third-quarter loss than analysts estimated as software revenue kicked in from its acquisition of Good Technology Corp, helping to offset the struggling handset business.

The loss excluding certain items was three US cents (four Singapore cents) a share, the Waterloo, Ontario-based company said yesterday in a statement. Analysts had predicted a loss of 14 US cents, the average of estimates compiled by Bloomberg. Revenue was US$557 million compared with projections for US$488.8 million.

BlackBerry is making progress towards a goal of US$500 million in annual software revenue by next March, a key part of chief executive officer John Chen's plan to transition the company away from relying on shrinking handset sales.

Software sales were US$161.5 million, up from US$54 million in the same quarter last year. "That's encouraging - that tells me they're on track to hit their US$500 million target," said Bloomberg Intelligence analyst John Butler.

The software revenue boost gets the company closer to that goal and emphasises the importance of the shift in strategy. BlackBerry sold 700,000 handsets in the period, fewer than some analysts had forecast, and down from the previous quarter.

Analysts had been watching to see if the Priv, BlackBerry's newest phone and the first to run on Google's Android operating system, would take off.

Hardware revenue was US$222.8 million, down from a year earlier but up from US$201 million last quarter.

BlackBerry shares jumped 8.7 per cent in the United States to US$8.48 at 9.44am yesterday in New York. They were down 29 per cent from Thursday's close.

"My first goal is to get us into a break-even position with the device business," Mr Chen said on a conference call with analysts. "Maybe next quarter, maybe a quarter later, but we're in that ballpark now."

Once that point is reached, strategic options become available, he said. Still, there is a good chance the firm will make devices profitable and stay in the business, he said.

BlackBerry needs to sell about five million phones a year for the unit to be sustainable, chief financial officer James Yersh said.

Mr Chen hinted that the firm will unveil new software relating to self-driving cars at the consumer electronics show in Las Vegas next month. BlackBerry's QNX unit, which makes infotainment systems used in millions of vehicles, said earlier this week it was partnering with Luxoft Holding to work on semi-autonomous driving technology like that used by Tesla Motors.

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A version of this article appeared in the print edition of The Straits Times on December 19, 2015, with the headline 'BlackBerry's third-quarter loss smaller than forecast'. Print Edition | Subscribe