UPDATE 4-BlackBerry cuts loss and sees rising sales; shares jump

Fri Sep 26, 2014 3:47pm EDT
 
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(Adds comments from BlackBerry CEO's briefing; updates stock price)

By Euan Rocha and Alastair Sharp

TORONTO, Sept 26 (Reuters) - BlackBerry Ltd reported a smaller quarterly loss on Friday and flashed encouraging signals about its hard-pressed smartphone business as well as its software and services sales, spurring a more than 4 percent jump in its shares.

The Canadian company, a smartphone pioneer pushed to the margins by Apple's iPhone and devices running Google's Android software, is now focusing more on software and services than on hardware as it works through a long turnaround.

On the services front, the company reported a huge number of conversions in its second quarter to its heavily promoted new device management platform. But BlackBerry's hardware unit also offered hopeful news, posting an adjusted profit for the first time in five quarters, helped by lower manufacturing costs and strong demand for its low-end Z3 handsets in emerging markets.

"This is the first time in a long time that we have actually made money on hardware," Chief Executive John Chen told reporters, while hinting at plans to unveil new phones at Mobile World Congress in Barcelona in 2015. "We think we can continue on that track, so hardware is no longer going to be a drag to the margin and the earnings."

The Waterloo, Ontario-based company's revenue in North America rose from the previous quarter, but sales slipped elsewhere. Its total revenue was down more than 40 percent from a year earlier.

"They're taking all the right steps, which is great. It's encouraging to see," said BGC Partners analyst Colin Gillis. "Now we've got to see what Chen can do about the revenue decline."

BlackBerry shares were up 5.2 percent at C$11.45 on the Toronto Stock Exchange and up 4.6 percent at $10.26 on Nasdaq.   Continued...