TORONTO BlackBerry Ltd (BB.TO)(BBRY.O) posted a surprise quarterly profit on Friday and said it is pushing to end a slide in its revenue in this fiscal year, sending the stock up as much as 5.1 percent.
"Our financial viability is no longer in question. We're now turning our attention to revenue stabilization," BlackBerry Chief Executive John Chen said on a conference call.
Chen plans to grow BlackBerry's small but high-margin software division by moving more customers onto its products, including a system that allows companies and government agencies to manage multiple employee devices.
The stock rose as high as $9.77, before easing to $9.59, up 3.1 percent on the Nasdaq, despite a much bigger-than-expected decline in fiscal fourth quarter revenue.
BlackBerry investors cheered the unexpected quarterly profit and solid growth in revenue from software products, which includes the QNX operating system, used in everything from cars to reactors.
Chen said while the average analyst estimate of a small per-share loss in the current quarter looks reasonable "we do intend to do better."
"Chen and his team are one of the better management teams out there," said BGC Partners analyst Colin Gillis. "But they have a lot of selling and a lot of execution to do."
Waterloo, Ontario-based BlackBerry reported net profit of $28 million, or 5 cents a share, in the fourth quarter ended Feb. 28. That compared with a year-earlier loss of $148 million, or 28 cents a share.
Excluding one-time items, quarterly profit was $20 million, or 4 cents a share. Analysts, on average, looked for a loss of 4 cents a share.
Revenue, however, slid to $660 million from $793 million, well below estimates of $786.4 million.
"BlackBerry continues to do a good job controlling operating expenses and eliminating its cash burn during its business transition, but the total revenue was still a big miss and we still have concerns about the demand side," said Morningstar analyst Brian Colello.
Software revenue rose 20 percent from a year earlier to $67 million. Analysts closely watch the metric, given the transition from its traditional hardware- and services-driven model.
"It's an early good sign," said Colello. "They are looking for a more meaningful ramp in the middle of fiscal 2016, but certainly it's a good start."
BlackBerry reported positive cash flow of $76 million in the quarter, and its cash position rose to $3.27 billion in the fourth quarter, from $3.1 billion in the third quarter.
(With additional reporting by Allison Martell; Editing by Jeffreys Benkoe and Hodgson)