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BlackBerry results reactions: 'Profitability was better than expected'

BlackBerry results reactions: 'Profitability was better than expected'

By Reuters | Updated: 28 March 2013 19:52 IST

BlackBerry announced better than expected results on Thursday, driven by demand for its new touchscreen device which holds the key to a successful turnaround for the smartphone maker.

BlackBerry, based in Waterloo, Ontario-based, said it sold about 1 million of the new Z10 (Review I Pictures) device in the quarter, and shipped roughly 6 million smartphones in the quarter ended March 2.

Net income in the quarter was $98 million, or 19 cents a share, compared with a year-earlier loss of $125 million, or 24 cents a share.

Commentary
Eric Jackson, founder and managing partner, Ironfire Capital LLC, which owns BlackBerry shares
"All in all I'm happy because I think the majority seemed to be expecting the world to cave in on them and that didn't happen."

"They blew away expectations on the bottom line. They're pretty good at managing their business and grinding all the profits out of it that they can. They probably underestimated the impact the core cost reduction program was going to have on the business."

"The thing people won't like is that subscribers dropped and revenue was below expectations but they'll care more about the guidance looking forward."

Peter Misek, Analyst, Jeferies & co, New York
"Those were really solid results, those earnings are awesome, the gross margin blew everybody out of the water, that was fantastic."

"The Z10 has a much stronger gross margin and ASP (average selling price) than people realize."

"They're making money, the corporate part of their subscription business is remaining strong, the consumer side, as they said, is going to decline here in the near term. Overall, this is step one on the recovery ladder and a very, very, very good result."

"The service revenue held up frankly as we expected. The overall revenue number missed because they sold about a million less of the non-BlackBerry 10 handsets, but frankly, they were losing money on every one of those handsets they sold, so I don't care."

"They said they were going to burn $500 million of cash and they effectively didn't burn anything, that was remarkable."

"The loss of three million subscribers versus my expectation of two was a disappointment, but frankly we were guessing at what rate they were going to lose consumer subs, so if you want to take a critical look that is the one critical piece."

Brian Colello, Senior Equity Analyst, Morningstar, greater Chicago area
"I think the encouraging thing is that BlackBerry was still able to sell a good portion of older models, generate solid service revenue during the transition. I think that will be important in terms of cash balance and profitability."

"I think the jumping off point for Z10 sales was important as well, and then from a financial standpoint, the fact that the cash held up well, that operating expenses were relatively held in check are encouraging signs. Obviously the bigger issue is BlackBerry 10 sales going forward, but if you do look back at the February quarter, I think you had more positives than negatives."

"Profitability was better than expected and I think marketing, all the ad costs for BlackBerry 10, were relatively constrained."

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