BlackBerry stems bleeding, but sells 1 million Z10s

Company to launch a midrange model later this year to boost sales

Research In Motion Limited, now doing business as BlackBerry, shipped about 1 million BlackBerry Z10 smartphones during its fiscal fourth quarter.

Anything more than a million in Z10 sales in the quarter can be considered a success for BlackBerry, anything less would have been disappointing, according to Ovum. The Z10 is the first BlackBerry 10 OS device.

BlackBerry shipped a total of 6 million smartphones in the quarter, the company said Thursday as it released its quarterly earnings.

Revenue in its fiscal fourth quarter, which ended on March 2, was approximately US$2.7 billion, down 36 percent from the same quarter of fiscal 2012. Net income from continuing operations for the quarter was $94 million, compared to a net loss of $118 million during 2012.

It had about 76 million subscribers, compared to 79 million during the previous quarter.

The company also announced that co-founder Mike Lazaridis, has decided to retire as vice chairman and a director of the company. Lazaridis co-founded BlackBerry nearly 30 years ago and served as a co-CEO of the company until last year.

"[Lazaridis] revolutionized the mobile communications industry when he invented the BlackBerry and he is widely recognized as one of Canada's greatest innovators," CEO Thorsten Heins said during a conference call presenting the results.

While Lazaridis deserves a lot of credit, he and former co-CEO colleague Jim Balsillie, who retired last year, were unable to reply swiftly to the onslaught from Apple's iPhones and Android-based smartphones.

The announcement of the first shipment figures for the Z10 is a momentous occasion for the company, as BlackBerry tries to claw its way back in the smartphone market, it is too early to draw any major conclusions from the figures, according to analysts. That's in part because the BlackBerry Z10 just went on sale in the U.S. last Friday.

"The Z10 hasn't been on the market for the full quarter, first of all. Second of all, and more significantly, the U.S. launch isn't reflected in the results. Also, the Z10 is just one in what will be a long line of products in 2013," said Geoff Blaber, who leads mobile device software research at CCS Insight.

There also have been supply constraints in markets where the phone has been launched, meaning that even if people wanted to buy them they haven't necessarily been able to, according to market research company Ovum. The second BlackBerry 10 smartphone, the Q10 -- which has the classic BlackBerry physical keyboard -- won't go on sale for some time, so many of the prime candidates for buying a BlackBerry 10 device will be waiting for that, it said via email.

The first true referendum on BlackBerry 10's success or lack thereof will come after the current quarter, Ovum said.

During BlackBerry's conference call, Heins underlined that what the company has done so far is only the beginning. The Q10 will start shipping in April, and the company is working on less expensive BlackBerry 10-based smartphones, as well.

"The midrange BB10, expect that kind of around fiscal midyear in various markets ... We are looking forward to that because we know there is a big demand," Heins said.

The company also continues to investigate potential licensing opportunities and the use of its new platform in areas other than smartphones, including the automotive sector, according to Heins.

Analyst Blaber had another suggestion for a priority: "The first thing it needs to do is to ensure that the existing subscribers base that have been on older BB 7 products start to upgrade, and see the value with BlackBerry 10."

Send news tips and comments to mikael_ricknas@idg.com

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