BlackBerry Ships 2.7 Million BB10 Smartphones, Posts $85 Million Loss

By Michelle Maisto  |  Posted 2013-06-28

BlackBerry Ships 2.7 Million BB10 Smartphones, Posts $85 Million Loss

BlackBerry CEO Thorsten Heins repeated that his company is running a marathon, not a sprint, during a June 28 conference call to discuss the results of BlackBerry's fiscal 2014 first quarter.

Following last quarter's surprise profits, BlackBerry surprised again, this time with a loss of $84 million. While an improvement on the $518 million loss the company posted a year ago, the news sent BlackBerry shares falling by 20 percent before the market opened.

BlackBerry shipped 6.8 million smartphones during the quarter, 2.7 million of which were BlackBerry 10 devices.

Last quarter, BlackBerry shipped 6 million smartphones, of which 1 million were BlackBerry 10 phones.

"I'm confident in the future of BB10, but there's lots of work to do still. So it's going to be an ongoing effort, it's not going to be automatic," said Heins. "It's a highly competitive smartphone market, so you've got to be on your tippy toes all the time. ... This is a marathon, and with our financials, we're ready to run that marathon."

Heins also broke the news during the call that, despite earlier promises, the company won't be releasing a BB10 version of its PlayBook tablet. (Perhaps not entirely shocking news, given Heins' earlier comments to the media.)

"I made the difficult decision to stop these efforts," said Heins, adding that he believes it's better to focus on more key hardware initiatives. BlackBerry plans to launch one additional phone this year.

"We are only five months into a platform transformation that will drive the company ... for many years to come," said Heins. "What is exciting about BlackBerry today is we are getting comfortable with who we are today and how we will fit in the market."

BlackBerry introduced its long-awaited new platform in January, though U.S. carriers didn't begin selling the touch-screen-centric BlackBerry Z10 until late March.

The BlackBerry Q10, the first BB10 device with the dedicated keyboard loved by BlackBerry enthusiasts, has been slow to follow in the United States, due to the extensive testing U.S. carriers need to perform. BlackBerry's first quarter closed June 1, but Verizon Wireless didn't begin selling the Q10 until June 5, which was the day AT&T said it would start accepting preorders.

Sprint has committed to begin offering the Q10 in "late summer."

In May, BlackBerry introduced the BlackBerry Q5, a lower-end QWERTY smartphone for the Asia-Pacific region and developing markets. It arrived in Dubai last week, and during the second quarter is expected to launch with 106 carriers.

"It is indeed early days, especially with the Z10 and Q10, which will appeal more to corporations than consumers," Gartner Research Vice President Carolina Milanesi told eWEEK.

BlackBerry Ships 2.7 Million BB10 Smartphones, Posts $84 Million Loss

"The Q5 will be the device that will make more of a material difference from a consumer perspective, given the price point," she added. "My concern right now is that it looks as if carriers are moving to Windows Phone, as far as showing support for the number of devices in their portfolios."

Analyst Ken Hyers, with Strategy Analytics, also said it would be premature to write off BlackBerry.

"That said, the trends are worrying, particularly loss of consumers in emerging markets, where customers, spoilt for choice with low-cost smartphones, are beginning to give up waiting for the Q5," said Hyers.

"In developed markets, the picture is also dire," he added, "as consumers have emphatically chosen the iPhone and Android smartphones, and are also paying attention to Nokia's Lumia [Windows Phone] smartphones."

BlackBerry Preparing for Better Days Ahead

BlackBerry this week introduced Secure Work Space for iOS and Android, its solution for supporting the iPhones and Android devices in companies with bring-your-own-device (BYOD) policies. And earlier in the month, it previewed a solution for automakers that will enable them to push out over-the-air software updates to vehicles.

BlackBerry's Enterprise Service 10 (BES 10) also continues to gain momentum. While as of May 12,000 companies had deployed the solution, today 18,000 have—and behind those deployments, said Heins, will come handset sales.

"These are very, very exciting growth initiatives," said Heins. "We will drive them hards and there will be a time when we will see the value of these initiatives."

The company expects to put its finances back in the black in a year's time.

"I view this as our year of investment," said Heins, adding that he's looking forward to solid growth and profits in BlackBerry's fiscal year 2015.  "A transition takes time."

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