Bad News BlackBerry
BlackBerry shareholders hoping the company’s first quarter would bring hard evidence of the smartphone pioneer’s resurgence were handed something else entirely Friday morning when it reported financials: A total travesty.
Not only did BlackBerry miss on earnings, posting an ugly loss for a quarter for which analysts had projected a profit, it missed badly on smartphone shipments, selling just 6.8 million total BlackBerrys. Of those, just 2.7 million were BlackBerry 10 devices. Worse still, it lost some four million subscribers during the quarter.
Said Wedge analyst Brian Blair, “The results are so dismal all of the bulls have to admit defeat to some degree now and the camp of cheerleaders is going to be a lot smaller after this report.”
A crushing disappointment. Remember, the BlackBerry 10 operating system was to be the engine of the company’s comeback effort. If this quarter — the first full quarter that BlackBerry’s new BB10 phones were on sale, and one that should have benefited from all sorts of post-launch marketing and buzz — generated only a piddling 2.7 million shipments, what chance does BlackBerry really have at mounting a comeback?
Tough question. But one for which BlackBerry CEO Thorsten Heins did have an answer this morning: BlackBerry is still in the early phases of its BB10 transition, and the company is about more than devices.
“We are five months into a platform transformation that we anticipate will drive future smartphone device sales, greater enterprise efficiency, and a new mobile computing opportunity for years to come,” Heins said. “We’ve never been a devices-only company. We also run a global secure data network and services business. And we don’t plan to run the company with a short-term device-only strategy.”
Fair enough. But such always-look-on-the-bright-side-of-life pronouncements hardly temper concerns about BlackBerry and its much-ballyhooed next-generation platform after a pratfall of a launch quarter.
“The quarter showed material evidences that BlackBerry 10 is gaining very limited traction with users, be it consumers or enterprise,” Bernstein analyst Pierre Ferragu told AllThingsD. “The business model of BlackBerry will now come under severe pressure, with shipments likely to decline slowly, service revenues to erode at an accelerating pace and pricing likely under pressure. Difficult to imagine how the company can invert the trend now.”
At $10.88, BlackBerry shares are down 24.66 percent in early trading.