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BlackBerry To Ramp Up Marketing

Waterloo, Canada – BlackBerry reports initial U.S. sales of its Z10 smartphone “are meeting our early expectations,” and it shipped 1 million Z10 phones globally in only a “few weeks” of availability in a few countries, president/CEO Thorstein Heins said.

In an investors’ conference call, the company also said it expects to boost marketing spending by 50 percent on a sequential basis in its fiscal first quarter, which started March 3, to support the launch of its two BlackBerry 10-equipped smartphones. They are the full-touch Z10 and the keyboard-equipped Q10, due to launch in select global markets in April.

Despite the rising marketing expenditures, the struggling company said it will break even in the fiscal first quarter because of a lower cost base, more efficient supply chain, and improved hardware margins.

For its fiscal 2013 fourth quarter ending March 2, BlackBerry posted its second consecutive quarter of net income following consecutive quarterly losses that began in last year’s fiscal 2012’s fourth quarter.

In other comments, Heins said that of the Z10 phones shipped to date, two-thirds to three quarters have sold through, the phones are selling through “pretty quickly,” some global markets are out of stock, and the company ramped up Z10 production late in its fiscal fourth quarter.

Although the Z10 launch is still in its early days in the U.S., he continued, “We see strong marketing support from them [U.S. carriers].” The Z10 launched last week through AT&T and launched Tuesday through T-Mobile. Verizon availability starts March 28. Sprint plans to offer the Q10.

 As for future BlackBerry 10 launches, Heins said the company is “building a portfolio” of BlackBerry 10 smartphones this year, and a mid-tier model will appear in the middle of the fiscal year “in various markets.” The market should “stay tuned” for an entry-level BlackBerry 10 offering, he added.

Heins also shed some light on who is buying the Z10, saying 55 percent of the people who bought the Z10 to date traded in phones based on other operating systems. Given that long-time BlackBerry users like hard QWERTY keyboards, the keyboard-equipped Q10 “will go strong into the existing BlackBerry base,” he added

In other comments, he noted that 60 carriers launched the full-touch Z10 in 40 countries in the fiscal fourth quarter, but 223 carriers are testing the device, and 40 carriers are testing the Q10.

In other announcements, BlackBerry said it shipped about 1 million BlackBerry 10 smartphones between its January 31 launch in the U.K. and March 2, when the company’s fiscal fourth quarter ended. For the entire fourth quarter, the company shipped six million smartphones, including the BlackBerry 10 devices, down from the third quarter’s 9 million smartphones, and the company’s subscriber base shrank to 76 million from the third quarter’s 76 million.

Fourth-quarter financial results show the company improved its net income and shrank its operating losses on a sequential basis, but the company nonetheless posted full-year losses in operating and net income, whereas it posted operating and net income in the previous fiscal year.

Revenues for the fourth quarter shrank 18 percent on a year-over-year basis to $2.68 billion and for the full year by 40 percent to $11.1 billion.

Fourth-quarter operating losses shrank to $12 million compared to a year-ago loss of $135 million, and full-year operating loss hit $646 million compared to year-ago operating income of $1.16 billion.