WATERLOO, Ontario/TORONTO (Reuters) - BlackBerry Ltd BB.TO plans to make a decision by September on the future of its beleaguered smartphone business, but its Chief Executive John Chen stressed on Friday he remains confident the company will have a profitable hardware segment by then.
The smartphone industry pioneer has been pivoting to focus more on software and services as its smartphone market-share has dwindled, and its shares sank Friday after it reported a larger-than-expected slide in fourth-quarter revenue largely as sales of its new Android-based Priv device missed expectations, due to delays with certain carrier launches.
The Canadian company’s shares closed down about 7.5 percent in New York and Toronto as the results raised fresh questions about the viability of its legacy hardware business.
“My number one focus is to stay in the hardware business beyond September, but I’m also a realist, I’m not going to stay in the business and continue losing money,” said Chen.
He said BlackBerry plans to release a new mid-range Android-based device before September, and that the company plans to do a better job targeting enterprise clients with its new devices.
Chen said BlackBerry is working on licensing its hardware know-how like its virtual keyboard and security software, moves it sees boosting hardware segment revenue and getting it closer to profitability.
The Waterloo, Ontario-based company recognised revenue on roughly 600,000 devices in the quarter. Chen said three million device sales a year at an average price of around $300 would get the unit to break even. He had previously estimated BlackBerry needed to sell five million to achieve this goal.
Software and licensing revenue for the year came to $527 million, exceeding BlackBerry’s target of $500 million. It is targeting 30 percent organic growth in that business this fiscal year.
Many analysts and investors remain sceptical.
“We’re looking for even faster growth,” said Brian Colello, an analyst at Morningstar, noting BlackBerry needs “exponential software growth” to complete its transformation into a stable, profitable entity.
Overall revenue fell to $464 million from $660 million a year earlier and was about $100 million lower than the average of analyst expectations, according to Thomson Reuters I/B/E/S.
It reported a net loss of $238 million, or 45 cents a share, in the fourth quarter ended Feb. 29, compared with year-earlier profit of $28 million, or 5 cents a share. Excluding one-time items, it lost 3 cents a share, against expectations for a 10-cents-a-share loss.
Editing by Cynthia Osterman and James Dalgleish
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