Blackberry Shocks Analysts with $98M Profit in Q4

Blackberry is not out of the race yet.

Blackberry, formerly known as Research in Motion, reported an incredible profit of $98 million, or 19 cents per share, for the three-month period to March 2. This surprised just about everyone, as on average analysts had predicted a loss of roughly 29 cents per share for the period, as reported by CNET.

Last year, the firm lost $125 million, or 24 cents per share, over the same period.

Excluding items such as its cost-savings program, Blackberry reported an adjusted earnings per share of 22 cents.

That’s the good news.

While profit was surprisingly good due to better than normal margins on its new flagship phone, Blackberry Z10, and its cost savings program kicking in early, the company also reported that sales fell 36 percent to $2.68 billion over the same period; Blackberry lost three million subscribers, bringing its total base to 76 million.

The shrinking user base is especially inconvenient for a company that prides itself on customer loyalty.

“To say it was a challenging environment to deliver strong results could be the understatement of the year," CEO Thorsten Heins said during a conference call last week, as reported by CNET. “But getting back to a profitable quarter is just the starting line, not the finish line.”

Blackberry hopes the Z10 and a refreshed line of handsets can start to woo back customers. The company sold one million units of the Z10 over the period, and that total came from only a few early launch markets. Sales from the Z10’s U.S. launch, which happened last Friday, aren’t included in the quarter’s sales results.

CNET is reporting that the company sold six million smartphones and 370,000 of its heavily-discounted PlayBook tablets.

The one-million total is what was shipped to carriers, however – not how many units are sold to consumers. The sell-through rate seems to hover around two thirds in the first three quarters, according to Heins, although market demand varies wildly at this point.

According to the company, 55 percent of Z10 customers came from rival platforms, indicating that the phone is attractive enough to entice users to switch smartphone platforms.

The company also has the Q10 in the docks, a Blackberry smartphone with a hardware keyboard that is expected to launch in early April. Currently, Blackberry is testing the phone with 40 carriers in 20 countries.

A mid-tier phone also is expected for later in the year, and Heins said a high-end device on par with the Z10 would also come out in time for the holidays.

So while Blackberry is no longer the dominant smartphone maker thanks to Apple and Google, don’t count the company out just yet.