BlackBerry Posts Modest Profit, Says It's on Track to Hit Milestones

BlackBerry's Q1 revenue was down dramatically from a year ago, but it's on track to be cash-flow positive by the end of this year, said CEO John Chen.


BlackBerry CEO John Chen told analysts June 19 that his team is enjoying a "small celebration of a successful quarter."

During its fiscal 2015 first-quarter, BlackBerry managed to keep revenue, at $966 million, relatively flat quarter-over-quarter, though it was down from $3.1 billion a year ago. BlackBerry also saw hardware revenue on approximately 1.6 million smartphones (though it sold 2.6 million units), compared with sales of 6.8 million phones a year ago.

The BlackBerry of a year ago, of course, was an entirely different company, a larger, less laser-focused enterprise run by a different executive team. Chen has trimmed his staff, sold off real estate, and arranged partnerships—such as the deal announced June 18 with Amazon—to prevent his team's energies from being spread out or diluted.

During the first quarter, spending was $255 million—down 57 percent from the $784 million of a year ago. And instead of the $84 million loss posted last June, Chen announced a modest net profit of $23 million.

"All areas of our business are making very good progress," said Chen. "We feel very good about what it will take to get BlackBerry back to profitability."

BlackBerry has enjoyed a "strong uptick" in sign-ups for its EZ Pass program, with 10 percent of the traded-in licenses coming from BlackBerry competitors, Chen said. BlackBerry's Jakarta phone was well-received in Indonesia, where "inventory ran low" during certain periods, thanks to healthy demand. BBM Protected rolled out ahead of schedule, and the company is excited about Project Ion—its Internet of things initiative—and its recently purchased share of NantHealth, a platform today used by 250 hospitals and connecting more than 16,000 medical devices. ("What's exciting," said Chen, "is its potential.")

BlackBerry also has plans to introduce the next version of its operating system, BlackBerry 10.3, this fall, along with a new phone, called the Classic, meant to keep BlackBerry's oldest and most faithful users in place—if not possibly woo back a few it has lost and who still pine for a great physical keyboard.

In September in London, it will also introduce another phone. The straight-shooting Chen, with a smile in his voice, told those on the call: "All the information has already been leaked. You guys should go online and check it out."

He also said, maybe revealing more than he'd intended, that the phone, called "Windermere," in leaked reports, has been named the BlackBerry Passport.

Reports show the phone to have an unusually wide display—it's nearly the size of a passport—and an equally unusual three-line dedicated keyboard, along with a 13-megapixel camera and a huge battery.

While BlackBerry may continue to find users for its devices, which Chen expects will be a profitable piece of the business by 2016, it's clear that the three other key areas that Chen has confined his efforts to—enterprise mobility management (EMM), cross-platform messaging and embedded systems—will be what keeps the company moving forward.

Chen spoke during the call of convincing a number of customers who were planning to leave BES to continue on.

"Sometimes when I show up it's a little too late … but sometimes … we can gain something back. That's the power of EZ Pass. … They see it's going to cost them no more money to use our new technology … so it's a very powerful argument. I was able to convince a number of major customers that they should at least try out BES12 [which will arrive later this year]. It costs them nothing," Chen said.

During the quarter, 54 percent of BlackBerry's revenue came from services.

In addition to making its handsets profitable in fiscal year 2016, Chen has said he believes the company can be cash-flow positive by the end of fiscal year 2015.

In his concluding remarks Chen repeated, "I strongly believe we can meet the milestones that we've laid out."

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