BlackBerry Maker Posts a Narrower Loss - New York Times

OTTAWA â€" , the troubled maker of the once-dominant BlackBerry smartphone, reported another sizable quarterly loss on Thursday, but a smaller one than the quarter before. Along with an increase in revenue, the results produced a surprise that sent the company’s stock up sharply.

Still, there was no concealing how far RIM’s fortunes had declined. Its net loss for the latest quarter, which ended Sept. 1, was $235 million â€" better than the $518 million loss in the previous quarter, but a steep fall from the net income of $329 million in the same quarter a year earlier.

The company said revenue in the most recent quarter was $2.9 billion, up from $2.8 billion in the first quarter though down 31 percent from $4.2 billion a year ago. Analysts had expected a far steeper year-on-year drop in revenue of 41 percent, which would have raised fears that the company would have to dip into its cash holdings. It actually increased its cash thanks to sharp cost-cutting.

As a result, RIM’s stock jumped more than 20 percent in after-hours trading. In the regular session, before the announcement, it had closed at $7.14 a share.

“Make no mistake about it, we understand that we have much more work to do,” the chief executive, Thorsten Heins, said in a statement. “But we are making the organizational changes to drive improvements across the company.”

Phone sales are slowing sharply, though. Shipments of phones last quarter were 7.4 million compared with 10.6 million a year earlier.

“The street is largely giving RIM a pass on this quarter as it readies the important BlackBerry 10 launch,” said Bill Kreher, an analyst at Edward Jones. “The fact of the matter is that the company has really placed all its bets on BlackBerry 10.”

Many analysts had expected nothing but bad financial news for the quarter long before Thursday. And several of them said they were now focused on next year, when RIM has promised to introduce its twice-delayed line of BlackBerry 10 phones. The new smartphones will be based on an entirely new and more sophisticated operating system and are promised for the first calendar quarter of next year.

“I don’t think anything good can come out until they release BB 10, aside from selling the company or something else in the strategic review,” said Peter Misek, an analyst with Jefferies & Company.

But Shaw Wu, an analyst at Sterne Agee, said the dominance of Apple and has closed the window of opportunity for RIM’s BlackBerry 10 strategy and turned the company’s last great hope into its biggest problem.

“It’s about survival now, it’s not about BlackBerry 10,” said Mr. Wu, who is based in San Francisco. “That’s almost secondary. The battle now is staying alive and looking after your current customers. It’s not really clear that their core customers are looking for BlackBerry 10.”

At a developers’ conference earlier this week, Mr. Heins announced one of the few positive results from the quarter. Some analysts had speculated that growth in RIM’s subscriber base had stalled, or even declined, for the first time in its history. But Mr. Heins told the meeting in San Jose, Calif., that the number of BlackBerry users had grown to 80 million, up from 78 million.

Unlike other smartphone makers, RIM continues to directly profit from every active BlackBerry handset long after its sale. RIM receives monthly subscription fees from carriers for every BlackBerry in exchange for routing the phone’s data through its own, closed network. Under normal conditions, the network allows RIM to provide high security for corporate and government users and it reduces the amount of wireless data consumed by all BlackBerrys.

RIM is not in immediate danger of bankruptcy. The company reported on Thursday that it still held $2.3 billion in cash, an increase of $100 million from the previous quarter. But Mr. Wu said that costs associated with layoffs at the company, as well as its unprofitability, were now leading some users, including large corporate customers, to question RIM’s long-term survival. Unless BlackBerry 10 is an exceptional hit, which is far from certain, Mr. Wu said that RIM might be able to continue for only one or two more years.

But there were no signs of retreat from Mr. Heins. Like his predecessors, Jim Balsillie and Mike Lazaridis, he was boldly predicting that BlackBerry 10 would again allow RIM to stand alongside Apple, Google and makers of Android phones as a dominant player in the smartphone business.

“BlackBerry 10 introduces a shift to true mobile computing,” Mr. Heins told the RIM-sponsored gathering of software developers on Tuesday. “We are laying the groundwork for a fundamental change in how people communicate, collaborate and engage with each other.”

While physical keyboards remain a significant attraction for many BlackBerry users â€" a stylized variation of their keys forms the BlackBerry logo â€" Mr. Wu said he was surprised that RIM continued to emphasize the virtual, touch-screen keyboard on the prototype versions of its coming phones. Only after their absence during the prototype’s unveiling in May was widely noted did Mr. Heins confirm that BlackBerry 10s with physical keyboards would be coming. No prototype of those phones has been displayed and Mr. Heins again devoted a great deal of Tuesday’s session to promoting features on the coming virtual keyboard.

“It’s not clear to me that fighting the touch-screen battle is the best use of RIM’s resources,” Mr. Wu said. “There are customers that actually like the current BlackBerry the way it is. They should be focused on trying to retain that customer base as much as they can. Then, sure, you can work on your BlackBerry 10 or whatever.”