WATERLOO, Ont. — BlackBerry sold about 100,000 fewer smartphones in its last quarter despite the launch of its first Android-powered device, the Priv.
The company said Friday it sold roughly 600,000 cellphones over the three-month period ending Feb. 29, the first full quarter to include sales of the Priv, which BlackBerry released with much fanfare last November. It did not specify how many of the devices sold were Privs.
In the previous quarter, BlackBerry (TSX:BB) sold roughly 700,000 phones.
Apple sold nearly 75 million phones in its first quarter of 2016.
BlackBerry has a lot riding on the Priv. Some industry watchers anticipate BlackBerry will stop producing cellphones altogether if Priv sales are lacklustre.
Executive chairman and CEO John Chen admitted hardware revenue fell short of the company's expectations. But he said he remains optimistic about BlackBerry's future in the smartphone market.
"I still believe that we have a shot at it," he said during a conference call with investors in Waterloo, Ont., where the company is headquartered.
"Hopefully, I'm not naive."
He partly attributed the drop in sales to lengthy contract negotiations with major cellphone carriers including Verizon Wireless that pushed new distribution deals into the next quarter. BlackBerry plans to tackle distribution, which Chen identified as the main issue, to help increase sales.
The Priv is now available in 34 countries, he said — up from four since the previous quarter.
As the high-end smartphone market is becoming saturated, Chen said he is also looking at creating a mid-range device, but is not prepared to make an announcement yet.
Chen said the company is on track to make money from its smartphone business during this fiscal year, which began March 1, and needs to sell about three million smartphones for an average price of about $300 to break even. But he reiterated that if the business remains unprofitable, BlackBerry will have to stop making smartphones.
BlackBerry's other businesses performed better in the last quarter. Its software and services revenue was up 106 per cent for the same quarter year over year.
The company's priority is ramping up this segment of its business and projects it will grow about 30 per cent this fiscal year, Chen said. He suggested this could tie into hardware sales.
BlackBerry reported a US$238 million net loss in its fourth quarter, with much of the red ink attributed to costs related to restructuring and acquisitions. The loss amounted to 45 cents US per share.
After adjustments that exclude the restructuring and acquisition costs, the loss was three cents per share — less than analyst estimates of 10 cents per share.
Revenue was US$464 million, including a writedown of deferred revenue associated with recent acquisitions. Without that, it would have been US$487 million.
The revenue was below analyst estimates of US$563 million, according to Thomson Reuters.
In mid-morning trading, BlackBerry shares were down about seven per cent at C$9.76 on the Toronto Stock Exchange and US$7.48 on the Nasdaq, a decline of nearly eight per cent.
