CEO Thorsten Heins and his new management team have taken a money-losing Research In Motion Ltd. and returned it to profitability.
RIM posted a fiscal fourth-quarter profit of $98-million, a surprisingly solid result against expectations of a loss, suggesting a positive sales start for the all-important BlackBerry 10 lineup.
But even if Mr. Heins has ushered in a strong quarter on the sale of one million new BlackBerry Z10s, there is no rest for him or his team yet. In many ways, the comeback is only just beginning, in an increasingly competitive global smartphone market in which no one is assured survival.
Indeed, RIM shipped six million phones, a decline of nearly one million from the prior quarter and another reminder that even as the company launches its new Z10 BlackBerry around the world, sales of older, BlackBerry 7 devices are dropping off steeply. The company's global user base also declined by three million, bringing the total number of current BlackBerry users around the world to 76 million. By contrast, Apple Inc. sold 47.8 million iPhones in the last quarter alone.
These are worrying reminders of just how far RIM has fallen. But under Mr. Heins, things seem to be improving, if slightly, and the company's customers continue to tilt away from North America and toward booming emerging markets in Latin America and Africa.
"It has not been easy, but the BlackBerry team is delivering," Mr. Heins told analysts on a conference call. "To say it was a very challenging environment to deliver improved financial results could well be the understatement of the year."
RIM, which informally calls itself BlackBerry, saw sales of $2.7-billion (U.S.) in the fiscal fourth quarter, with a profit of $98-million or 19 cents a share, compared with a loss of $125-million or 24 cents a year earlier. Analysts had forecast a loss of 34 cents a share.
The quarter, however, measured sales only from Dec. 20 to March 2: With the BlackBerry 10 launch event on Jan. 30 and a gradual rollout since, this quarter's results are still only a small window into sales of the new device – and the quarter does not include the crucial U.S. launch on March 22, nor the launch of the much anticipated BlackBerry Q10, which retains the company's signature physical keyboard and is expected to be a hit with many diehard corporate users. Still, analysts seemed pleased.
"Blackberry continues to show superb execution on almost all fronts," Byron Capital Markets analyst Tom Astle said in a note on Thursday. "Today's profitable results should significantly reduce concerns about the company's viability."
On the conference call, Mr. Heins emphasized a cultural shift at the company as it moved to slim down, iron out management complexity and straighten out its supply chain. Mr. Heins also moved to reassure investors that service fees flowing in from corporate customers would not decline as quickly as many originally feared. He reiterated that the BlackBerry Q10 will launch in April, is already being tested with wireless carriers and will drive sales in the first quarter.
But the positive results are far from a definitive assessment of the new platform's success. The sales figures in part reflect pent-up demand that has come with not launching a new BlackBerry since August, 2011.
Mr. Heins added on the call that RIM would bring out a whole portfolio of BlackBerry 10 devices, including some lower-priced models, by the middle of the fiscal year. This addresses concerns analysts have had about RIM focusing too heavily on the maturing high-end smartphone market with the Z10 and the Q10 models, while many emerging markets – many of which still favour BlackBerrys, but where Samsung and others are becoming more popular – continue to see explosive growth.