Early this morning, BlackBerry announced its earnings for both its 2013 fiscal Q4 and full year periods. Perhaps to no one's surprise - given CEO Thorsten Heins' sober and tight cost-control approach to running BlackBerry- the company has managed to build on the modest $9 million profit it managed to report for its fiscal Q3 2013 quarter back in December, 2012. Today, BlackBerry reported a nearly 10X increase in net income of $98 million. Adjusted earnings came in at 22 cents a share, well ahead of the loss of 29 cents a share analysts were expecting, according to a Thomson Reuters poll.
Gross margins for the quarter jumped to 40.1 percent, a significant improvement over the total fiscal year's 31 percent - which again reflects the significant cost-cutting that Heins has necessarily pushed. Cash in hand also increased from the previous quarter, from $2.1 billion to $2.9 billion for Q4.
During the BlackBerry earnings call this morning, Hein's delivered an upbeat message - it didn't focus on the underlying cost-cutting ($1 billion in planned savings accomplished ahead of schedule) but rather, the message was crafted to deliver a strong thank you to the BlackBerry workforce (12,700 current full time employees) and a message of having come a long way over the last 18 months. In truth, the company has indeed come a very long way since the dark days of Heins' first days as CEO.
Not all the news is rosy however - the company continues to lose subscribers, with the company shedding three million in Q4. Adding to the million it lost in Q3, the company is now down to 76 million subscribers from the high it reached of 80 million about six months ago. The company has sold approximately one million Z10's since the new device's launch, and Heins noted that many of the purchases are coming from non-BlackBerry users. BlackBerry sold about five million of its older devices during the same period, for a total of six million total devices sold.
We're not quite sure what to make of this - it is good news on one hand, but from a different perspective it suggests a lukewarm reception from the subscriber base. We're of the opinion that the latter view is the important one. There has been a question raised if the as yet unshipped Q10 - the new device that sports a physical keyboard - is tamping down purchases by the established BlackBerry community. This may have some truth to it - clearly many BlackBerry users love their keyboards. It's a damn shame and in our opinion inexcusable that the Q10 won't ship until late summer. It's the one black mark we hold against the Heins record to date.
As might be expected from such a significant drop in subscribers, revenue was down for fiscal Q4 compared to Q3. Revenue from continuing operations for the fiscal year ended March 2, 2013 was $11.1 billion, down 40 percent from $18.4 billion for fiscal 2012. The company’s GAAP net loss from continuing operations for fiscal 2013 was $628 million, or $1.20 per share, compared with GAAP net income from continuing operations of $1.2 billion, or $2.23 per share in fiscal 2012. Adjusted net loss from continuing operations for fiscal 2013 was $317 million, or $0.60 per share.
Similarly, there was a drop - albeit a small drop - from fiscal Q3. Revenue fell from $2.73 billion to $2.68 billion. However, net earnings jumped from $9 million in Q3 to today's $98 million. This reflects the tight cost controls. Below are the relevant Q4 and full year fiscal 2013 numbers.
There really isn't much more to say about the numbers. The good news is that as a "small business" relative to the giants that Samsung and Apple are the company has turned a corner on stemming losses and returning to what we hope will be a sustainable profitability. The years of BlackBerry wowing the world are long gone but it appears to be the case that the company can remain a viable ongoing business. We still believe a Samsung acquisition would do wonders for Samsung's enterprise efforts but a healthy if much smaller BlackBerry is a good thing as well. Kudos to Heins, even though the Q10 launch is still months away.
Finally, we will note that although the initial launch of the Z10 hasn't been stellar, neither AT&T nor Verizon have kicked in yet with any real United States marketing. Verizon is expected to do a lot more with its launch next week on the marketing end - we'll see how it goes. AT&T meanwhile will have to kick up its own marketing and in-store efforts - which have been lackluster to say the least. The next quarter will be far more important in terms of judging how the entire new BlackBerry 10 ecosystem will play out.
Finally one last quick note. BlackBerry also announced today that Mike Lazaridis has decided to retire as vice chair and a director. So the last true vestiges of the old RIM are now completely gone from the company. It's sad in a way - Lazaridis co-founded RIM nearly 30 years ago and saw the company zoom to awesome mobile heights before the big fall. In any case, Lazaridis is now involved in funding new mobile healthcare initiatives, which should keep him well-occupied. We wish him well and hope that he is able to help deliver breakthroughs on this front.
Edited by
Brooke Neuman 
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