BlackBerry shares rise after surprisingly strong quarter

BlackBerry posted a slight profit of $23 million US in the three monthsto the end of May, a performance that was better than what analysts were expecting and enough to push the company's shares higher on the TSX.

The Waterloo, Ont.-basedsmartphonemaker, which reports in U.S. dollars unless otherwise noted, posted a loss of 11 cents a share when the accounting is adjusted for the impact of a cost-cutting program and a change in the value of the company's debentures, but the positive net income figure was welcomed warmly by investors as an improvement on the loss of $84 million in the same period a year ago.

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Revenues dropped by$10 million to $966 million, down from $977 million in the previous quarter, although thecompany's cash and investments balance for the first quarter was $3.1 billion, up from $2.7 billion at the end of the previous quarter.

The company's annual general meeting kicked off on Thursday morning, a few hours after the quarterly numbers were released before stock markets opened.

During the quarter,BlackBerrybooked revenue for about 1.6 millionsmartphonesales, which is an increase from the revenue from 1.3 million devices a quarter earlier.

The results demonstrate that the company is "firmly on track to achieve important milestones, including our financial objectives and delivering a strong product portfolio," CEO John Chen said.

"Everything BlackBerry does is about security we will not lose that fight," he said.

When asked what the odds of the company's survival are, he said they're looking pretty good, but not for certain. "When we start making money, I'll give it 100 per cent," Chen quipped.

During thequarter ended May 31, the company launched theZ3,a low-cost touchscreensmartphone,in Indonesia, a market that Chen described as "huge" for BlackBerry.

According to Chen, sales of the Z3were exceeding expectations, but hewould not disclose exact numbers.

We originally expected to do a million phones, were going to do better than that, said Chen, indicating that the numbers were expected over the lifetime of the device.

BlackBerry shares gained more than $1, or almost 11per cent, to $10.03 on the TSX on Thursday. It closed up 9.3 per cent at $9.84.

NewBlackBerryphones

Chen also offered a glimpse at what the company has up its sleeve moving forward, including a large phone known as the Passport, which looks a little like a cross between a small tablet and a large phone.

I would like to call it a phablet, the reason I couldnt call it a phablet today is because marketing wont let me, thats number one, jokedChen. Secondly because you have to go clear some of the FCC certifications and so forth, but it really is the beginning of our phablet.

Chen hinted the phone, code named Windermerewould also have a mobile-reader capabilities. You can read a book like youre flipping the page, he said.

But Canadians will have to wait to get their hands on the large phone.

Were going to launch this first in Europe. The Europeans love it, said Chen, who said the company is planning to launch the phone in September.

Looking ahead

Chen said the company hopes to be at the break-evenlevel financially by the end of this fiscal year, and hopes to return to profitability within two years.

BBM, as I said, we now have a reasonable plan to expect next year we could go a $100 million, gross a $100 million in revenue, said Chen, explaining the revenue expected for the next fiscal year would come from sources that would include BBM Protected, mobile payment systems like BBM Money in Indonesia, the EnStream mobile payments deal, and working with advertising placement companies to sell advertising on BBM channels.

Earlier this week,BlackBerryannounced a partnership with the AmazonAppstore thatwill allow users access to apps likePinterestand Netflix, and last week touted themobile-paymentdeal withEnStream, a joint venture between Bell, Rogers andTelus.

For the first time we finally quote unquote solved a big part of our application ecosystem problems, said Chen of the Amazon deal.

Chen said the company is at the tail-end of the layoffs announced in September 2013, when the company said it would be cutting 4500 workers from its global workforce.

Im actually in the process of focusing on hiring. Thats why I went to the University of Waterloo and said, I want co-ops and I want students, graduating students. And Im doing that pretty much around the world, were now re-staffing, said Chen.

Ill probably start modestly because of the challenges we were just talking about earlier, probably a few hundred, and just go from there.