UPDATE 5-BlackBerry revenue plunges 64 pct, shares drop

Fri Mar 28, 2014 4:42pm EDT
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(Adds CEO comment on revenue, market reaction)

By Euan Rocha and Allison Martell

TORONTO, March 28 (Reuters) - BlackBerry Ltd reported a smaller-than-expected loss on Friday as new chief executive John Chen slashed costs, but a 64 percent drop in revenue underscored the challenge Chen faces in turning around the struggling smartphone maker.

The Canadian company, which has lost most of the smartphone market to Apple Inc's iPhone and gadgets powered by Google Inc's Android operating system, has laid off thousands and agreed to sell most of its real estate.

Chen said he expects to be cash flow positive or neutral by the end of the current fiscal year, which runs to early March 2015. He does not expect to turn a profit until sometime in the following fiscal year. At a round table with media on Friday afternoon, Chen said he also does not expect revenue growth until some time that fiscal year.

"John Chen did what John Chen is known for. He came in and he's cut the cost base," said BGC Partners technology analyst Colin Gillis, who noted the company's "precipitous" revenue drop. "He's buying himself some time."

Research and development expenses fell 24 percent in the fourth quarter from a year earlier, while selling, marketing and administration costs dropped 35 percent.

Shares of BlackBerry, whose share of the global smartphone market was below 1 percent at the end of 2013, rose in early trading but closed down 7.1 percent at $8.41.

BlackBerry's Nasdaq-listed shares were trading above $60 in early 2011 but dropped sharply that year, and have not risen above $20 since.   Continued...