TORONTO -- Investors hoping for a fast turnaround at BlackBerry instead received a first-quarter report on Friday bathed in red ink and diminished prospects for profits in the near future.
The company's shares tumbled 26 per cent after chief executive Thorsten Heins said further losses were expected in the second-quarter and scrapped plans for upgrades to its PlayBook tablet devices.
The Waterloo, Ont.-based company posted a first-quarter loss of US$84 million, 16 cents per share for the three months ending June 1, improved from a loss of $518 million, or 99 cents per share, a year ago.
But the adjusted loss from continuing operations was $67 million, or 13 cents per share compared with predictions for a profit of six cents per share, according to a poll of analysts by Thomson Reuters.
"Strong products alone are not good enough to insure solid, long-term turnaround so we have been intensely focused on maintaining a strong balance sheet and delivering efficiency," Heins told analysts on a conference call.
"We will continue to focus on our financial strength and believe we are well-positioned to continue to invest in our platform and compete in a highly competitive market."
Revenue increased to $3.07 billion, up from $2.81 billion a year ago, but also fell short of analyst expectations of $3.36 billion.
During the quarter, BlackBerry subscribers fell by four million to 72 million, though the company says it will no longer provide those figures because they don't accurately reflect its reworked business model.
Missing from the quarterly results were specific sales figures for its new smartphone models, though chief financial officer Brian Bidulka said 40 per cent of the 6.8 million phones shipped to sellers were its new models, which would represent 2.72 million devices.
The shipment figures, which offer an idea of how well the phones might be selling, suggested that while BlackBerry has focused much of its efforts on the launch of its new phones, the majority of sales still came from older models, particularly in emerging markets.
"Much of the hope was that these (new phones) would be able to bridge the gap from the legacy products, and it appears that it's not enough," said Bill Kreher, a technology analyst with financial services firm Edward Jones.
He said the results were "worse than feared" and maintains a sell rating on the stock.
"Generally speaking, momentum wanes after the initial push and so the company is certainly running out of chances."
Other analysts took a more drastic tone, including Kevin Smithen at Macquarie Capital who revisited his opinions on the value of BlackBerry if it were to be broken up and sold. He downgraded the company to an underperform with a target price of US$9.
"The future is bleak for BlackBerry as an operating business, in our view," he wrote.
"BlackBerry has yet to adjust its supply chain for lower BB10 unit sales. We are concerned that rising BlackBerry and channel inventories could cause a significant drawdown in cash over the next few quarters."
The company also abandoned Friday an operating system update to its PlayBook tablet that would've made it work seamlessly with the new phones, a signal BlackBerry will eventually clear the sales flop from its line of products entirely.
-- The Canadian Press