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Healthy BlackBerry fourth-quarter profit a surprise

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TORONTO -- BlackBerry delivered a US$98-million profit in its fourth quarter, surprising analysts who had expected the smartphone maker to report a loss as it launched its new high-end touchscreen smartphone.

The Waterloo, Ont.-based company, which spent much of the quarter rolling out its BlackBerry Z10 in the United Kingdom, Canada and elsewhere, said it shipped about one million of the smartphones during the reporting period.

The quarter, which ended March 2, didn't include Z10 sales from the United States since major U.S. carriers didn't start rolling out the smartphone until last week. The U.S. sales of the BlackBerry 10 devices will begin to be reflected in the company's fiscal first quarter, which ends June 1.

"We've made great progress and we're proud of it, but we're also well-grounded," said president and CEO Thorsten Heins in a conference call with analysts.

"Everyone at BlackBerry understands there's more work to do, and delivering BlackBerry 10 and getting back to a profitable quarter is just our starting line -- not the finish line."

BlackBerry said its marketing spending, which can include publicity as well as behind-the-scenes incentives with carriers, will increase by 50 per cent but it did not provide specific financial commitments.

The company's subscriber base, which had been growing until the third quarter, was also on the downswing with a decrease to 76 million from 79 million, a sign that more people ditched their BlackBerry in favour of competitors' phones.

The drop was mostly in North America and Europe, though it was partly offset by more subscribers in Latin America and Asia.

Heins said the decline in subscribers shouldn't come as a surprise.

"We knew, and we said it last quarter, there would be a deterioration in those subscriber numbers," he said in an interview with The Canadian Press.

But as BlackBerry rolls out its new devices across the world, the company is working behind the scenes to create additional services tied to its BlackBerry Messenger and other phone features that could boost revenues.

"The question is how quickly can we really come up with services that we can monetize."

In its outlook, BlackBerry said it expects to "approach break-even" results in the first quarter of its current financial year based on lower costs, a more efficient supply chain and improved hardware margins.

The company, which formerly called itself Research In Motion, reported a profit of 19 cents US per share for quarter ended March 2, compared with US$125 million or 24 cents per share in a loss a year ago.

Analysts had expected on average a loss of 29 cents per share, according to estimates compiled by Thomson Reuters.

Revenue increased to $2.68 billion, coming in below expectations of $2.84 billion, according to a poll of analysts by Thomson Reuters.

"At this point, it's cautious optimism," said Colin Cieszynski, a market analyst at CMC Markets Canada of the results.

"They have still obviously have a long road to go to get back to where they were. They have very formidable competition but so far they seem to be doing OK."

-- The Canadian Press

Republished from the Winnipeg Free Press print edition March 30, 2013 B9

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