BlackBerry stems bleeding, sells 1 million Z10s

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

BlackBerry today reported a return to operating profit for its fourth quarter amid sales of 1 million Z10 smartphones. But there was also a decline of 3 million global subscribers, down to 76 million.

Research In Motion CEO Thorsten Heins
Blackberry CEO Thorsten Heins last May.(Photo: Eduardo Munoz / Reuters)

"BlackBerry has gone through a major and exciting transition this year," CEO Thorsten Heins told analysts on a conference call, without making much reference to the subscriber declines. The profit of $94 million came on revenues of $2.7 billion for the quarter that ended March 2.

The 1 million new Z10 smartphones were sold mainly in Canada and the U.K. before the quarter ended, well before sales even started in the U.S. last Friday at AT&T.

Heins told analysts that sales of the Z10 and Q10 qwerty device would be helped by an infusion of 50% more marketing dollars globally in the current quarter, although he didn't provide a dollar amount.

Later in the year, BlackBerry plans to launch midpriced and low-end BlackBerry 10 devices around the globe, he said.

"BlackBerry seems to have effectively slowed down the bleeding to a trickle," said Jack Gold, an analyst at J. Gold Associates. "The loss of subscribers is troubling of course, especially in a key market like the U.S."

BlackBerry said its fourth-quarter revenues from the U.S. were 14% of the total, a decline from the previous quarter of 19%. For all of North America, revenues declined to 22% in the fourth quarter from 24% in the previous quarters, while the areas of Europe, the Middle East and Africa surged to 46% of the total revenues in the fourth quarter, up from 43% for the prior quarter.

Heins also said that 55% of the sales of the Z10 were from customers moving from other platforms than BlackBerry. He predicted that Q10 qwerty devices, which will go on sale in the next three months, will do well with traditional qwerty users in corporate and government jobs.

"We are very, very strong in qwerty," he said, noting that the device is being tested by 40 carriers globally. "No doubt we will be marketing BlackBerry 10 aggressively."

Blackberry's marketing has been a disappointment to some analysts so far, and Jan Dawson of Ovum called the U.S. launch of the Z10 "very low key, with carriers not featuring the devices and sales staff poorly briefed on its benefits."

Dawson added: "Overall, there's some hope in these [fourth-quarter] numbers, but also reasons for serious concern. BlackBerry absolutely has to execute in the next quarter in getting the Z10 available in sufficient numbers, launching the Q10, getting carriers to ramp up their marketing, and building momentum around BB10, if it's going to make a success of this new platform."

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His email address is mhamblen@computerworld.com.

See more by Matt Hamblen on Computerworld.com.

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