BlackBerry Maker Posts a Narrower Loss, and Stock Jumps in After-Hours Trading - New York Times

OTTAWA â€" , the troubled manufacturer of the once-dominant BlackBerry smartphone, reported another sizable quarterly loss on Thursday, but a smaller one than the previous quarter. However, the company continues to face a difficult future as it struggles to get a new phone out the door.

Without naming the rivals to the BlackBerry 10 phone, Thorsten Heins, the company’s president and chief executive, acknowledged that Apple’s 5, new smartphones running Google’s operating system and Windows Phones will make life even more of a struggle for RIM before its rollout.

“There’s many new products coming in so the market is going to get tougher, more challenging,” Mr. Heins told analysts in a conference call Thursday, adding that that will most likely force RIM to cut prices further.

After twice delaying the BlackBerry 10, the company has promised to deliver the smartphone sometime next year.

Many analysts had expected nothing but bad financial news for the quarter long before Thursday. “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.”

There was no concealing how far RIM’s fortunes had declined. Its net loss for the second fiscal 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. Shipments of BlackBerrys last quarter were 7.4 million, compared with 10.6 million 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 and some feared that the company had dipped into its cash holdings. But RIM 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 its announcement, it closed at $7.14 a share. RIM’s shares have been as high as $24.74 over the last year.

Several analysts said they were now focused on next year. The new smartphones will be based on a 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 Android had 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.”

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. Some analysts had expected that the company would report that subscriber growth had stalled. At a developers’ conference earlier this week, Mr. Heins  said that the number of BlackBerry users had instead 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.

But it became apparent in the conference call that growth was driven by sales in markets like South Africa and Indonesia where prices and service revenue are low.

“They’re pushing the subscriber base up by offsetting the loss of very high-value customers in markets where it’s critical to build momentum now,” said Charles S. Golvin, an analyst at Forrester Research. “It’s a matter of the market getting away from them.”