SHAFAQNA – SHARES in Blackberry jumped as much as 8pc on Friday, as the Canadian smartphone maker dramatically narrowed its losses and impressed investors with its new, square handset designed to take on Apple’s iPhone.
The gadget helped to quell mounting investor concerns over the company’s steadily sliding revenues, which fell a further 42pc to $916m in the second quarter after more corporate customers gave up on older Blackberry handsets. The Ontario business came much closer to pulling out of the red than analysts had forecasts, as losses narrowed from $965m to $207m.
John Chen, chief executive, said that the company had cut costs and strengthened its balance sheet but that revenue growth was only likely to begin in 2015, when it started selling new products and services.
“Our workforce restructuring is now complete, and we are focusing on revenue growth with judicious investments to further our leadership position in enterprise mobility and security,” Mr Chen said in a statement.
The Hong Kong-born executive took the reins of Blackberry nearly a year ago to lead a last-ditch attempt to turn the company around.
The firm, founded as Research In Motion in 1984, used to account for more than half of the smartphone market, thanks to its robust devices with their “qwerty” keyboards. However, it was late introducing touch-screen mobiles, and its market share slumped to just 1pc last year amid intensifying competition from Apple and Samsung.
Many analysts thought BlackBerry would stop producing handsets under Mr Chen’s guidance, but he has said it will continue making the gadgets. On Friday, he showcased the Blackberry “Passport”, a smartphone which was formally unveiled earlier this week, and which combines BlackBerry’s characteristic “qwerty” keyboard with touch-screen technology. The handset is square in shape, and has impressed reviewers as being well-designed for reading and editing.
However, Mr Chen said the firm will focus on the company’s traditional areas of strength – namely its security and mobile device management services.
It appeared to be making headway in this regard. BlackBerry said it issued 3.4m licenses for its current BES10 platform in the second quarter, marking a sharp increase from the prior period. Around 25pc of the new customers came from rival mobile device managers.
Analysts said on Friday that Mr Chen’s strategy was starting to pay off but that Blackberry’s sales were still dwindling at a worrying pace.
“Broadly speaking, they’re doing the right things … but that revenue number is getting real small,” BGC Partners analyst Colin Gillis told Reuters.
Shares in Blackberry rose more than 8pc to a high of $10.67 on Friday, and were trading up at 6.9pc by late morning in New York. The company has almost doubled in value since last November, when its share price dropped as low as $5.44. However, it is still a fraction of its high point in 2008, when shares nearly touched $145.