BlackBerry Reports Fourth Quarter and Year-End Results for Fiscal 2013

BlackBerry
By Kevin Michaluk on 28 Mar 2013 07:12 am EDT
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Ok CrackBerry Nation, the numbers for Q4 are in. You can read the press release below or click here to see the full release on Market Wire. 6 million BlackBerry Smartphones were shipped last quarter, with approximately 1 million of those devices being BlackBerry 10 handsets (remember, that's about a month's worth of UK sales and three weeks in Canada). Also of note, former RIM CEO Mike Lazaridis is stepping down from the board.

The investor webcast kicks off at 8am EDT. You can listen in here and be sure to keep it locked to CrackBerry as we'll be live blogging the earnings call. From there, we'll be recording a quick podcast which we'll post later today, and our in-house analyst Chris Umiastowski will be following up with his report on what it all means.

Press Release

WATERLOO, ONTARIO--(Marketwire - March 28, 2013) - Research In Motion Limited (doing business as BlackBerry) (NASDAQ:BBRY)(TSX:BB), a world leader in the mobile communications market, today reported financial results for the three months and fiscal year ended March 2, 2013 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).

Q4 Highlights:

  • Revenue of $2.7 billion
  • GAAP income from continuing operations of $94 million, or $0.18 per share diluted
  • Adjusted income from continuing operations of $114 million, or $0.22 per share diluted
  • Gross margin of 40% driven by higher average selling prices and hardware margins
  • Shipments of 6 million smartphones, including approximately 1 million BlackBerry 10 units
  • Subscriber base of approximately 76 million
  • Cash flow from operations of $219 million, cash and investments balance of $2.9 billion

Q4 Results:

Revenue for the fourth quarter of fiscal 2013 was approximately $2.7 billion, down $49 million or 2% from approximately $2.7 billion in the previous quarter and down 36% from $4.2 billion in the same quarter of fiscal 2012. The revenue breakdown for the quarter was approximately 61% for hardware, 36% for service and 3% for software and other revenue. During the quarter, BlackBerry shipped approximately 6 million BlackBerry smartphones and approximately 370,000 BlackBerry PlayBook tablets.

GAAP income for the quarter from continuing operations was $94 million, or $0.18 per share diluted, compared with the GAAP income from continuing operations of $14 million, or $0.03 per share diluted, in the prior quarter and a GAAP loss from continuing operations of $118 million, or $0.23 per share diluted, in the same quarter of fiscal 2012. GAAP income for the quarter, including income from discontinued operations, was $98 million, or $0.19 per share diluted, compared with the GAAP income including loss from discontinued operations of $9 million, or $0.02 per share diluted, in the prior quarter and a GAAP loss, including loss from discontinued operations of $125 million, or $0.24 per share diluted, in the same quarter of fiscal 2012.

Adjusted income from continuing operations for the fourth quarter was $114 million, or $0.22 per share diluted. Adjusted income and adjusted diluted earnings per share ("EPS") exclude the impact of pre-tax charges of $29 million ($20 million on an after-tax basis) related to the Cost Optimization and Resource Efficiency ("CORE") program. This impact on GAAP income from continuing operations and diluted EPS are summarized in the table below.

The total of cash, cash equivalents, short-term and long-term investments was approximately $2.9 billion as of March 2, 2013 and at the end of the previous quarter. Cash flow from operations in the fourth quarter was approximately $219 million. Uses of cash included intangible asset additions of approximately $235 million and capital expenditures of approximately $88 million.

"We have implemented numerous changes at BlackBerry over the past year and those changes have resulted in the Company returning to profitability in the fourth quarter," said Thorsten Heins, President and CEO. "With the launch of BlackBerry 10, we have introduced the newest and what we believe to be the most innovative mobile computing platform in the market today. Customers love the device and the user experience, and our teams and partners are now focused on getting those devices into the hands of BlackBerry consumer and enterprise customers."

Heins added, "As we go into our new fiscal year, we are excited with the opportunities for the BlackBerry 10 platform, and the commitments we are seeing from our global developers and partners. We are also excited about the new, dynamic culture at BlackBerry, where we are laser-focused on continuing to drive efficiency and improve the Company's profitability while driving innovation. We have built an engine that is able to drive improved financial performance at lower volumes, which should allow us to generate additional benefits from higher volumes in the future."

Outlook

The Company will be increasing its marketing investment in the first quarter of fiscal 2014 in support of the global launch of BlackBerry 10. Including the anticipated 50% sequential increase in marketing spending, the Company believes it will approach breakeven financial results in the first quarter based on its lower cost base, more efficient supply chain, and improved hardware margins.

Board Update

The Company also announced that Mike Lazaridis, having fulfilled the commitment he made to the Board in January 2012, has decided to retire as Vice Chair and a Director of the Company. Lazaridis co-founded BlackBerry nearly 30 years ago and served as a co-CEO of the company until last year when he was elected Vice Chair of the Board. Lazaridis, who last week announced the launch of his new venture, Quantum Valley Investments, will step down from the BlackBerry Board effective May 1, 2013.

"We are grateful to Mike for his contributions to BlackBerry during the past three decades," said Barbara Stymiest, Chairman of BlackBerry's Board of Directors. "Mike invented the BlackBerry and is widely recognized as one of Canada's greatest innovators. Mike played a pivotal role for the past 15 months in helping with the leadership transition and the successful launch of BlackBerry 10. We deeply respect and appreciate Mike's desire to devote his full-time efforts to his exciting new venture, and we wish him all the best."

"I admire Mike for his many achievements and for his vision in helping bring BlackBerry 10 to fruition," said CEO Thorsten Heins. "On a personal level, I am grateful to Mike for his help, guidance and advice during my first 15 months as CEO of BlackBerry. I wish him all the best."

"With the launch of BlackBerry 10, I believe I have fulfilled my commitment to the Board," Lazaridis said. "Thorsten and his team did an excellent job in completing BlackBerry 10. We have a great deal of which to be proud. I believe I am leaving the company in good hands. I remain a huge fan of BlackBerry and, of course, wish the company and its people well."

Read the rest of the Press Release Here

Earnings Call CrackBerry Live Blog Coverage

Reader comments

BlackBerry Reports Fourth Quarter and Year-End Results for Fiscal 2013

151 Comments

The common perception is BlackBerry is going out of business. They need to do something significant to combat this.

After the earnings announcement, the company's shares surged by more than nine percent in premarket trade. Kill the shorts.

Sadly, this is not false. Michael Genovese was on CNBC going in on the subscriser decrease and carriers over-ordering, but not being any demand for the products.

Not bad at all...the next quarter will be even better now that the Z10 is being released in the U.S and the caribbean...and the caribbean (especially barbados where i'm from) is a huge bb market!

Will not having BIS be an issue in the Caribbean. How are the networks and data charges in Barbados?

Posted via CB10

You are so right blackberry owns the caribbean hands down .......how about china??heard its a viable market

My take is slightly different. While I do agree, Barbados does have a huge chunk (live there too) many folks are jumping ship and others have mindshare of the competitors. Many still haven't heard of BB10.. Have had my z10 for going on 2 weeks and daily i get the surpised, "that's a Blackberry?" question.

Ill extend it barbados(the caribbean) has a huge chunk wont say many folks are jumping ship although some may have an s3 and iphone 4s and 5 lot of peeps still holding onto their blackberry in other words they are carrying around two devices

"We have implemented numerous changes at BlackBerry over the past year and those changes have resulted in the Company returning to profitability in the fourth quarter," said Thorsten Heins, President and CEO. "

~ Always a good beginning.
~ The sales of 1 million Z10s are for Canada and UK are for the launch month, isn't it? All other markets are not reflected in these numbers. Am I right?

I would think those sales numbers only include Canada and the UK seeing as it has not been available in the US for a full week yet.

Curious to see how the sales numbers will be for Q1 of 2013. That will be a better indicator of the future of Blackberry.

Acc to engadget of d 1M units shipped nearly 65-75% haf been sold.. U might wanna add dat to the post Kevin...

I read this as well... Channel fill is one thing we were all expecting to see and you have to assume this included devices filling the channel to partners that had not yet launched but were stocking to do so globally.

Possible... But still it would include only till starting of march.. so der is a gud chamce dat the US carriers are not included in it.....

That was interesting. Seems to me there are positives to take away from that. I also was encouraged to see they seem to really get they have a lot to do on the marketing side of things, and have allocated for that.

Now it will be interesting to see how the usual suspects will put a negative spin on things.

Posted via CB10

That 1 million BlackBerry 10 sales... Wasn't that the 1 big order that was made by an unknown buyer?

Posted via CB10

That one big order is most likely spreading over several quarters, not just this one reported. Remember the notes on that order said they were starting to ship now... they didn't say when that order was going to be fully filled.

So in layman terms this was good or bad ? i mean they did loose some points here and there, yet still over 75million subscribers, 1 million bb10 shipped + it's a lot to digest in one go. Looking forward to Thor's interview to get a more solid idea if this is good or bad.

Proud owner of the Z10, Playbook & Curve 9300

So, I have no idea what the stock is going to do today. There are a lot of good numbers in there but the bears will lock onto that subscriber number.

I hope people, especially in Canada, appreciate the many contributions Mike has made by starting RIM, and the continued contributions he'll make with his future projects.

What was Google;s subscriber base when they released the G1. It was zero. Blackberry has the benefit from not only getting new smartphone users, and ios/android users but with over 75 million people still on Blackberry id say it makes it easier for them to succeed.

I see what you are trying to get at but here's the thing: Android still has zero subscribers. Apple has zero subscribers. Other companies have users, but nobody except BlackBerry has any subscribers.

BlackBerry has historically worked on a different business model than the others, with carriers paying BlackBerry an ongoing fee for each BlackBerry user. BlackBerry users were BlackBerry subscribers. But BlackBerry announced three months ago that the company is shifting away from their old business model with BB10. This is what spooked the market after last quarter's results causing the shares to sell off and it is what most people seem to miss regarding the recent decline in subscribers; BB10 users are not subscribers.

The subscriber number will continue to fall but that doesn't necessarily mean the user base will fall. Importantly, what was missed in all the concern about the shift in business model is that the source of BlackBerry's service revenue is shifting, not disappearing. Service revenue will come from higher-value customers, of which there are fewer, rather than from every BlackBerry user. BB7 will continue to be supported (and those users will continue to be subscribers) but will naturally dwindle over the next few years; for the immediate future this source of service revenue will drop off faster than the new service revenue model will ramp up. This was reflected in this most recent report and commentary - subscribers dropped by 3 million while service revenue did not fall nearly as much in percentage terms.

BB7 will continue its run-off over the next few years (i.e. subscriber count WILL fall) while new sources of service revenue grow to partially offset the decline. At some point over the next few quarters this should balance out and eventually result in renewed service revenue growth. BlackBerry's decision to make this transition should prove to be a great long-term move for BB10 adoption and, ultimately, BlackBerry's profitability.

I see the market not reacting well on this one. They missed the street targets and 1 million units is not anything to dance about when you look at other smart phone launches that happen. Traders are fickle and will most likely dump based on that news.

I personally would hold on the news as a US launch could change the picture a bit.

Posted via CB10

Yet the stock is going up?
The company is now making money again, and that is all that matters from this.

Posted via CB10

At the end of the day it seems to me like they made a profit and even if that profit was a dollar its still profit.

yup just about to go to bed...will be interested to see how the day turned out when I get up tomorrow. 4 day Long weekend (in Australia)

Outlook is positive. They introduced Z10 last month of quarter. Subscription was to go down especially during the Christmas holidays. It will only get better moving forward. The worst is over. That is a great sign. Bottom has been reached.

Posted via CB10

They lost money on an operating basis but made a profit on a tax recovery. But the operating loss was less than expected.

Posted via CB10

Since BB10 users are not subscribers, I guess that number will continue to drop as BB users upgrade to the new platform....correct?

yeah, that is what I am thinking too. I think everyone expected the subscriber base to go down once people start switching BB10 so I am not sure why people thing that is a surprise.

Approximately 1 million blackberry 10 devices. Wow that is not good at all. With the s4 and iphone 5s coming sales will decline. The iphone 5 sold 5 million over the opening weekend. Just to put it in perspective. Rip blackberry!

1 million beat street estimates by a good margin. No one expects BB10 to compete head to head with the iPhone.

My order to be delivered today by 3:00 PM. Verizon Launch today. Can't wait to get it out in public and show it off.

I must be doing something wrong or my screen is too boring for people to notice it... 3 days on public trans with it.... I'm dying for someone to ask about it.

Considering the Z10 is a relatively unknown product that was launched into fewer and smaller markets than the iPhone5 I would say 1 million units is a very impressive launch. It is not a fair direct comparison but it far surpasses what the original iPhone did.

Seems Wall Street likes the report because the stock is up atm. BlackBerry beat estimates. Bears start to hibernate. Let the bulls run.

It's all about forward looking. They have not even sold too Enterprise yet other than to the UK yesterday. Loyal fans waiting for Q10. Spending 50% more in advertising and will break even next quarter.

Posted via CB10

Yeah.. stock goes up, stock goes down. I edited the first sentence of this post so it's relevant regardless what the price does. Need to hear the investor call.

Listen. I'm not a blackberry hater. But blackberry took 2 years to build this new platform and spent all this money marketing the new device and to only sell approximately 1 million z10 devices is not good at all. Especially when the first month is when most sales occur. Sales will decline because new and better devices will be hitting the market shortly. This is huge because developers will not be developing heavy hitting apps because approximately 1 million is not good enough for them to invest time and money into a weak subscriber base.

People said BB10 would be dead on arrival... so 1 million sales is a big. who says that blackberry has to beat the number one and two market share holders to be successful? You don't have to be number one to be a success.

posted via the CB app on my Z10

The Z10 was only available in Britain and Canada during that period. Perhaps some people should inform themselves before spouting off.
My I phone stays at home, while I can't put my Z10 down. Perhaps some Isheep are afraid that they own an inferior device.

Posted via CB10

Once again to put it in perspective. The iphone 5 sold 5 million in the first 3 days of sale. Pretty good considering you crackberry addicts claim it stale and old. Here you are with this new revolutionary device and sell approximately 1 million in 1 full month of sales. Just terrible.

hey Stevie??

You now live in a different world where you have the choice of only 2 phones...the Iphone 1 (back in 2007) or Blackberry 10 (now)....which one would you choose???

I think the choice is VERY obvious.

It's funny how the blackberry hates just won't admit they are wrong. They said the phone wouldn't make it to launch, they were wrong, they said the company won't make money ever again, and looks like that's wrong. The only reason people come to these forums is because they are probably passed they got an iphone5 6 months ago and can't afford to upgrade to the z10 now, so they come here to try and make themselves feel better by trying to make others feel shitty like thesleves

Posted via CB10

@stevieg82...and out of those '5 million', how many were disappointed that the iPhone 5 they waited in line for (for however long) wasn't much of an improvement over the iPhone 4S (and they paid a premium to get this iPhone 5...er iPhone update),,,another thing to note is how many of said iPhone 5 buyers were in that group that made up the 50ish% of those who bought the Z10? Another perspective, Apple sold about 1 million units in Q4 2007, and Blackberry may have sold the same number (this is an entirely new device, essentially a BB 1) over the course of a month. (read a report somewhere that may or may not be accurate that out of that million BB has sold about 75%) So go have a re-think...

The fact that Verizon is actually advertising the phone on their homepage and are going to release it today is going to make a huge difference..

I phone has to sell 5 million phones in 3 days otherwise their stock would not be priced at 450+

Some people need to really think before they post

Posted via CB10

The numbers are quite positive, though I would have thought the subscriber base was over 80M.
I can see the Z10 selling very healthy volumes now that it had a chance to establish itself. 1M is amazing, especially for being out for about 6 to 7 weeks. Can you imagine the numbers for a full complete quarter.
Good job BB. Enjoy your retirement Mike, from a Greek to a Greek. Well deserved sir.

Would be cool to see it over 80M too, but subscribers are all the Legacy BBOS users
Z10 doesn't use BIS, so it isn't included in the subscribers base

Stevie It's obvious you're here to bash blackberry you're probably just mad your shorts won't get you anywhere now that the positive news has been released, keep it moving- your dumb comments are not wanted here.

Posted via CB10

"That's partly because many investors are still betting against BlackBerry. As of March 15, nearly one-third of shares were held by short-sellers who think that BlackBerry's stock will fall. That's a whopping percentage, and it has contributed to BlackBerry's wild swings as "shorts" are occasionally forced to buy up shares in order to cover their positions.

I hope the shorts get thrashed. There is also a lot of liquidity to go long.

"Investors knew BlackBerry's fourth-quarter results wouldn't say much about the success or failure of the newly launched phones. For that, analysts will be looking to the company's first-quarter results. "

All I can say is that BlackBerry needs to keep their head down and ignore all the noise. BB10 will succeed and the Q10 will really get the upgrade cycle moving. Next quarter will be even better.

Just loving my Z10. Can't imagine owning anything else.

Posted via CB10

There are a lot more Toyota Corollas sold than Audi A8s. Does that mean the Audi is a failure? Let's all use our rational and logical thinking caps. :-)

Posted via CB10

Marketing is what we need right now. We have a great product. I'm in Thailand right now n everybody is so exciting about the phone. But for sure, I have to show it to them because they never heard of it. There is such a big potential. Marketing campaigns will make it possible that this potential will be used to increase the market share. Go go go go go BlackBerry

Posted via CB10

"BlackBerry smashes profit expectations as Z10 sales hit 1M" - National Post. Love that they used the word "smahes" as it will make people consider a BB, IMHO.

All I know is people like what they like. I love my Z10 and I feel ATT didn't do its part to sell it. They make me want to go to another carrier. Good luck to Mike.

Bears lose your shirt!! BlackBerry is back. With the q10 not being out the increase in marketing forthcoming and US, enterprise and governments able to get them soon along with other markets. I'm thinking that this will be great news for q1. BlackBerry must capitalize on these opportunities though.

CB10- BlackBerry Z10

Hey now that I think about it, doesn't "Subscriber Loss" also include in that number, people going from legacy BlackBerry phones to the new BlackBerry phones?

Posted via CB10

What a day! BB is in black and Habs beat Bruins last night! Bonus: Iggy to the pens and not the Bruins!

Don 't confuse one million Z10 "sold" with "shipped".
Shipped is an indication of supplier oders.
They lost 3 million subscribers. But now they have a new definition of a subscriber. It's somebody that owns a BB device instead of somebody who owns a device and has a data plan ? They probably lost more than 3 million ! :(

Will be interesting on how the day will play itself out and whether investors trying to cover their short positions will dominate the results.

My guess is the market will be 'glass half empty' type today and pummel the stock for losing subscribers, despite the results not reflecting any growth from first quarter post z10 launch results.

Posted via CB10

Don't forget, the Z10 still hasn't been released for all US carriers yet. Also, the Q10 is still waiting to show itself. I think BlackBerry can only improve. They just need to keep the momentum going.

Posted via CB10

55% of z10 buyers are coming from other platforms and BlackBerry beat the streets estimate and actually made money.

Android app % in BlackBerry world falls to 20% from 40%. For those of you who are mathematically challenged that means that somewhere around 8,000 android ports went native, there are actually less ports now at 100k than there were at 70.

In other words, don't listen to the hate, BlackBerry is back. Profitable and sitting on a vibrant app ecosystem that will only get better, launch of the q10 coming and the z10 now available world wide. Can't wait for next quarters results!!!!!!

Posted via CB10

So, the 1 million order from Brightstar gets taken into account next quarter. Today's announced 1 million are the sales in Canada, UK, etc from about a month or so. If that other million comes in effect next quarter with more sales of the Z10 and finally the Q10, i think we may expect good results next quarter . Read somewhere that there are still 100+ mill shares short. Feel free to (gently) correct me if i'm wrong with all above. This will get interesting and i also expect some squeezing next weeks.

http://www.cio.com/article/730870/BlackBerry_Earnings_Shipment_Numbers_S...

Could someone give the canonical definition for 'subscriber' now? In comments above, it looks like most think Z10 users are not subscribers, while some think subscribers include the Z10 converts. Which is it?

Subscribers going to get harder to count. I swapped the z10 into ActiveSync mode, so i'm no longer a subscriber technically.

You guys have to remember that those units shipped are shipped to carriers. Blackberry does not sell the units to the public. In all essence shipped and sold are pretty much the same thing

Love the haters, they are a funny bunch, just remember this iSheep every empire falls so don't cry too hard when you're precious Apple does. Way to go BlackBerry. And that may sound like a hateful comment to the iSheep who may read this, it's not, it's just a fact, and here us ago one for you, I can admit the iPhone is a great product but it has had its day, can you iSheep admit that the Z10 is better? Haha

Posted via CB10

I will have had my Z10 for exactly 1 week come tomorrow...(29Mar13),...it was wonderful on day 1...and is still wonderful today! Go Z10!!

A friend of a friend who is an IPhone user saw my z10 and she said, "Wow, that's a nice phone". I replied, ya, it is BlackBerry. She was silent after that. Lol