(Adds CEO comment on traditional smartphone business, reaction
from analysts, updates share price)
By Euan Rocha and Alastair Sharp
TORONTO, April 1 (Reuters) - BlackBerry Ltd BB.TO shares
sank on Friday after it reported a larger-than-expected slide in
fourth-quarter revenue which it blamed partly on disappointing
sales of its new Android-based Priv smartphone.
The Canadian company's shares fell more than 6 percent in
New York and Toronto as the weak results raised fresh questions
about the viability of its traditional hardware business.
The smartphone industry pioneer lost its early lead to major
rivals like Apple Inc's AAPL.O iPhone, and Chief Executive
John Chen hopes to redesign the company around higher-margin
software and services to manage mobile devices in the workforce.
But investors and analysts are skeptical the company can
grow software sales fast enough to offset the dragging handset
business and related fall in access fees from telecom companies.
"BlackBerry is slowly atrophying," said Ed Snyder, an
analyst with Charter Equity. "Their big bank account allows them
to slow things down but not change the direction."
Chen said if he can't make handsets profitable this year he
would consider cutting the unit loose.
"If by September I couldn't find a way to get there ... then
I need to seriously consider being a software company only," he
told CNBC television.
The Waterloo, Ontario-based company recognized revenue on
roughly 600,000 devices in the quarter. Chen said 3 million
device sales a year at an average price around $300 would get
the unit to break even. He had previously estimated BlackBerry
needed to sell 5 million to achieve this.
Software and licensing revenue for the year came to $527
million, exceeding BlackBerry's target of $500 million.
The company said it expects 30 percent growth in that
business this fiscal year, but even that failed to impress.
"We were looking for even faster growth," said Brian
Colello, an analyst at Morningstar. "BlackBerry is going to need
to grow this business at an extremely fast pace."
The company said organic software growth excluding
contributions from its Good Technology purchase was 24 percent.
Overall revenue fell to $464 million from $660 million a
year earlier and was about $100 million lower than the average
of analyst expectations, according to Thomson Reuters I/B/E/S.
It reported a net loss of $238 million, or 45 cents a share,
in the fourth quarter ended Feb. 29, compared with year-earlier
profit of $28 million, or 5 cents a share. Excluding one-time
items, it lost 3 cents a share, against expectations for a
10-cents-a-share loss.
(Editing by Bernadette Baum and Cynthia Osterman)