TORONTO -- BlackBerry (BBRY) reported a smaller-than-expected loss Friday as new chief executive John Chen slashed costs, but a 64 percent drop in revenue underscored the challenge he faces in turning around the struggling smartphone maker.
The Canadian company, which has lost most of the smartphone market to Apple's (AAPL) iPhone and gadgets powered by Google's (GOOG) Android operating system, has laid off thousands and agreed to sell most of its real estate.
Chen said he expects to be cash flow positive or neutral by the end of the current fiscal year, which runs to early March 2015. He doesn't expect to turn a profit until sometime in the following fiscal year.
"John Chen did what John Chen is known for. He came in and he's cut the cost base," said BGC Partners technology analyst Colin Gillis, who also noted the "precipitous" revenue drop. "He's buying himself some time."
Research and development expenses fell 24 percent in the fourth quarter from a year earlier, while selling, marketing and administration costs dropped 35 percent.
Shares of BlackBerry, whose global smartphone market share was below 1 percent at the end of 2013, rose in early trading but were down 0.8 percent at $8.97 midday. %VIRTUAL-article-sponsoredlinks%The stock is still up more than 30 percent from when Chen took over in November.
BlackBerry's Nasdaq-listed shares were trading above $60 in early 2011 but dropped sharply that year, and haven't touched above $20 since.
Morningstar (MORN) analyst Brian Colello said operating expense reductions were encouraging, to a point.
"The big question still remains what BlackBerry can do on the demand side," he said. "A lot of their moves have been supply related and internal, but we're still looking for strong signs that demand is improving."
Under Chen, the Waterloo, Ontario-based company is focusing on its services arm, which manages mobile devices on the internal networks of big clients.
The share of BlackBerry's revenue from hardware continued to decline in the quarter, to 37 percent, from 40 percent in the third quarter and 61 percent in the fourth quarter of last year.
Ross Healy, a portfolio manager at MacNicol & Associates, which has a small stake in the company, said BlackBerry is becoming a more attractive acquisition target.
"You can't cut your way to revenue, but what you can cut your way to is profitability," he said.
Back to the Future
The company's newer BlackBerry 10 phones have not lived up to high expectations, and after heavily promoting several devices with touch-screen keyboards, it is returning to its roots, emphasizing the physical keyboards its most loyal fans covet.
Last month BlackBerry unveiled a new "classic" model with a keyboard. Chen told Reuters in an interview that BlackBerry was designing three new keyboard-centric devices and would probably introduce them in the next 18 months.
On Friday's conference call, Chen said the company was set to begin a new production run of its Bold devices that run on the older BlackBerry 7 platform, as demand for them remains strong.
The company said it had recognized hardware revenue on about 1.3 million BlackBerry smartphones during the fourth quarter, compared with about 1.9 million devices in the third quarter.
It also said about 3.4 million devices were sold through to end customers, and this included shipments made and recognized before the fourth quarter. The company said 68 percent of these devices were BlackBerry 7.
Its net loss was $423 million, or 80 cents a share, for the fourth quarter ended March 1. That compared with a year-earlier profit of $98 million, or 19 cents a share.
Revenue fell to $976 million from $2.68 billion. Analysts on average had been expecting $1.11 billion, according to Thomson Reuters I/B/E/S.
Excluding restructuring charges and other one-time items, the company reported a loss of 8 cents a share. The average analyst estimate was a loss of 55 cents.
-Additional reporting by Leah Schnurr in Toronto.
14 Money Mistakes to Avoid in 2014
BlackBerry Loss Less than Feared, but Revenue Plunge Worries
Interest rates are low, but that's no excuse to accept 0.01 percent interest rates on your savings. Just a little shopping can find you many FDIC-insured savings accounts paying as much as 1 percent in interest, usually with no fees and easy availability to your money through electronic funds transfers. Compared to the near-zero rates that uninsured money-market mutual funds and other alternatives pay, high-interest savings accounts are a much safer way to save.
Banks still try to get customers to pay more for less, with one recent threat to charge fees for basic deposit accounts if the Federal Reserve cuts interest rates further. But many online banks not only offer fee-free options on their checking and savings accounts but also pay interest, and many have extensive fee-free ATM networks or reimbursement arrangements. If your bank follows through on threats to raise fees, taking your business elsewhere is your best move.
Bankrate reports that the average credit card charges around 16 percent in interest. That's a guaranteed money-maker for the banks that issue cards, but a big loser for those who carry balances on their cards. With many cards offering promotional interest rates as low as 0 percent, using them to get rid of high-interest cards is a no-brainer move and can help you pay your debt down faster.
Mistakes on your credit history can keep you from getting a loan that you want to buy your next home or car, but they can also have consequences you'd never imagine. Increasingly, insurance companies, apartment rental agents, and even prospective employers order copies of your credit report to see if you're financially responsible. Be sure to take advantage of your free credit check at the government's annualcreditreport.com website to make sure the three big credit-rating agencies have everything right before mistakes come back to bite you.
Payday loans have gotten more tightly regulated recently, but banks and other financial institutions still offer ways to let you get quicker access at your cash -- for a hefty fee. Resorting to short-term money fixes can land you in even more problematic situations down the road, because those solutions often create debt spirals from which it's hard to emerge unscathed. Set up an emergency fund instead and be prepared in advance for the money woes that life throws your way.
Interest rates have risen during the last half of 2013, with a typical 30-year mortgage carrying a 4.5 percent interest rate. But many homeowners still carry higher-interest mortgages from before the financial crisis. Now that home prices have risen, you might be able to refinance for the first time, and many homeowners have used lower rates to cut hundreds from their mortgage payment or shift to a shorter-term 15-year mortgage to pay off their debt faster.
Too many people never update their insurance coverage to deal with changes in their coverage needs, whether it comes from changes in family status for life insurance, health conditions for health-care or long-term care insurance, or even what types of property you own for homeowners' insurance. Don't wait for disaster to strike; check with your insurer or agent to see if your current coverage meets your needs.
In the past, investors had to pay hundreds or even thousands of dollars just to make a simple stock purchase. Now, though, the rise of discount brokers, low-fee index funds and exchange-traded funds, and freely available investment news and advice have made it silly to spend large amounts to get access to the financial markets. If you're still paying your broker too much to invest, look into alternatives that can help you avoid cutting serious money out of your retirement nest egg.
Everyone likes a tax break, and one of the best ones for you to use involves making contributions to a tax-favored retirement account. By putting money in an IRA or 401(k), you can reduce your current taxable income and save on your taxes while also preparing for the future. With 401(k)s, your employer might even chip in a bit on your behalf. Even when times are tough, finding even small amounts to save can put time on your side and make a big difference down the road.
Many investors found out the hard way this year that bonds aren't as safe as they thought, with some major bond funds posting double-digit percentage losses in 2013. Despite those losses, bonds still carry substantial risk in 2014, with many calling for imminent interest-rate hikes that would erode their value further. Even now, bond rates are so low that they don't compensate you much for their risk.
If you pay full price for just about anything these days, you're paying too much. The rise of deep-discount stores has led to falling prices at stores and shopping malls. Moreover, online tools like coupon sites, daily-deal offers, discounted gift cards, and cash-back credit-card deals can cut your costs as well. With all these tools, you won't find many situations in which you have no chance of getting a bargain on the items you want.
In the past, many young adults focused on getting into as strong a college as they could, figuring that their degree would pay them enough to make up for the costs they incurred. With college graduates facing a more challenging job environment than ever, smart students are thinking about college costs before they make a decision on a school. By maximizing financial aid and looking at lower-tuition schools with nearly as strong educational quality, you can avoid creating a big debt hole that you'll struggle with for years into the future.
If you don't have a will, a power of attorney for financial and health-care matters, and an advance directive to tell medical professionals whether you want certain life-preserving measures taken if something happens to you, then you're putting your family at risk. Many people don't have even these basic estate-planning documents, but getting them in place is easier and less expensive than most believe. Get your affairs taken care of in 2014 and save your loved ones some big future hassles.
Resolving to be more financially astute and to avoid common mistakes will help you get your finances in order more quickly. These tips should give you more money to help you meet all your financial goals.