BlackBerry shares rise on surprise quarterly profit despite lower revenues

BlackBerry surprised with a small quarterly profit on Friday, even as the company saw a large drop-off in the number of actual sales.

The Waterloo, Ont.-based technology company earned $28 million, or five cents per share. Adjusted earnings (which remove non-recurring gains) came to four cents per share.

Analysts were expecting a loss of three cents per share, according to a survey by Zacks Investment Research. In the same period a year ago, the company lost $148 million, or 28 cents a share.

But despite the slight profit, the smartphone and software company saw its revenues drop 33 per cent to $660 million. A year ago, the figure was $976 million. Wall Street was looking for $833.1 million this quarter.

Investors focused on the surprise profit however, and shares rose more than five per cent before the opening bell. They closed up $1.72 at $9.46. The company expects to put up operating profits consistently at some point during its next fiscal year.

Beating expectations

BlackBerry has now beat expectations on the profit side for two quarters in a row.

Over a longer term, however, the numbers suggest the company's revenue is in freefall. Blackberry took in $18 billion in revenue in 2012. That slipped to $13 billion in 2013, down to $6.8 billion last year and is now down to $3.34 for fiscal 2015 as a whole

BlackBerry shares have dropped 15 per cent since the beginning of the year.  But the stock has increased 1.5 per cent in the last 12 months.

"Our focus this past year was on getting our financial house in order while creating a multi-year growth strategy and investing in our product portfolio. We now have a very good handle on our margins, and our product roadmaps have been well received," Executive Chairman and CEO John Chen said in a statement.

"The second half of our turnaround focuses on stabilization of revenue with sustainable profitability and cash generation."

Troy Crandall, a technology analyst with MacDougall, MacDougall and MacTier, said BlackBerry is not out of the woods yet.

"John Chen has done a great job at containing costs and has been doing that for the past few quarters. That showed in the actual earnings," he told CBC News.

But revenue missed expectations by $130 million because of fewer handsets sold and the fact that too few users using BlackBerry technology in a free trial opted to pay for it.

"The whole negative of the story is that revenue is much lower than what the street had expected," he said.