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BlackBerry shares plummet 26% after first-quarter results miss expectations


 

TORONTO – Shares of BlackBerry (TSX:BB) plunged more than 26 per cent in early trading after the smartphone maker’s latest results fell short of analyst expectations and it warned that further losses were likely to come next quarter.

The Waterloo, Ont.-based company posted a first-quarter loss of US$84 million, 16 cents per share for the three months ended June 1, improved from a loss of $518 million or 99 cents per share a year ago.

But the adjusted loss from continuing operations was $67 million, or 13 cents per share, deeper than predictions for a profit of six cents per share, according to a poll of analysts by Thomson Reuters.

The company’s shares fell $3.96 to C$11.09 shortly in morning trading on the Toronto Stock Exchange.

BlackBerry subscribers fell by four million to 72 million in the quarter, though the company says it will no longer provide those figures in the future because they don’t accurately reflect its reworked business model.

The company has also scrapped plans to offer an operating system update for its PlayBook tablet, signalling that it will eventually clear the sales flop from its line of products entirely.

Earlier this year, chief executive Thorsten Heins said an update to the PlayBook was on its way, though at the company’s recent conference in Florida, he pulled back on those guarantees before completely ruling them out.

“Our teams have spent a great deal of time and energy looking at solutions that could move the BlackBerry 10 experience to PlayBook but unfortunately I am not satisfied with the level of performance and user experience and I made the difficult decision to stop these efforts and focus on our core hardware portfolio,” he said in the company’s conference call.

Missing from the quarterly results were specific sales figures for its new smartphone models, though chief financial officer Brian Bidulka said 40 per cent of the 6.8 million phones shipped to sellers were its new models, which would represent 2.72 million devices.

The split suggested that while BlackBerry focused much of its efforts on the launch of its new phones, the majority of its sales still came from its older models, particularly in emerging markets.

Shipment figures offer an idea of how well the phones might be selling, but are not official sales numbers.

Revenue increased to $3.07 billion, up from $2.81 billion a year ago but also falling short of analyst expectations of $3.36 billion.

The quarterly results were particularly weak in Latin America where the company says “foreign currency restrictions” in Venezuela negatively affected service revenues by $72 million.

BlackBerry also said it managed to boost its cash reserve to $3.1 billion from $2.9 billion in the previous quarter, even when factoring in the huge amount of cash the company was expected to spend on marketing for the launch of its new phones.

“We will continue to focus on our financial strength and believe we are well positioned to continue to invest in our platform and compete in a highly competitive market,” Heins said.

Heins also noted he expects BlackBerry will book an operating loss in its second-quarter results, due to heightened competition in the smartphone industry.

BlackBerry launched its Z10 phones, equipped with its new BlackBerry 10 operating system in January. The Q10 version with a keyboard was launched later in Canada, the U.K. and other markets.

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