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BlackBerry Reports 34 Percent Q3 Revenue Drop

The company, however, reports a third-quarter operating profit of $43 million, with CEO John Chen saying BlackBerry 'achieved a key milestone in our eight-quarter plan with positive cash flow.'

BlackBerry Friday reported a 34 percent decrease in revenue to $793 million for its fiscal third quarter ended Nov. 29, a loss of $148 million, or 28 cents a share. Analysts had projected revenue of $932 million.

Despite the disappointing revenue numbers, the Waterloo, Ontario, company did report third-quarter operating profit of $43 million, compared with $36 million in the prior quarter.

"We achieved a key milestone in our eight-quarter plan with positive cash flow. We also attained another important milestone in the release of our new enterprise software products and devices," said BlackBerry CEO John Chen in a statement. "Our focus now turns to expanding our distribution and driving revenue growth."

[Related: CRN Exclusive: BlackBerry's COO Promises Partners Will Be Involved In Samsung Pact]

During the quarter, BlackBerry launched its first smartphone under Chen's watch since joining the company in November 2013. Featuring its unique square-shaped display, the enterprise-focused BlackBerry Passport commanded 200,000 pre-orders, Chen said during the device's launch. No specific numbers on Passport sales were given during the earnings call; however, BlackBerry said it recognized hardware revenue on about 2 million smartphones.

"The phone launches continue to be soft, in my opinion," said Robby Hill, founder and CEO of HillSouth, a Florence, S.C.-based BlackBerry partner. "BlackBerry is not spending a lot on advertising to get the exposure they need. They are getting some publicity out of their launches but it isn’t getting the attention of an Android or an Apple launch. The end users want to hear about it from their friends and the media to drive some attention to the new products."

BlackBerry Wednesday launched its second smartphone under Chen, the BlackBerry Classic, at an event in New York.

In late November the company unveiled a partnership with Samsung in which the two companies will sell each other's mobile security technology to enterprise customers. BlackBerry also launched the most aggressive iPhone trade-in program to date, offering up to $550 to customers who trade in their iPhone for a BlackBerry Passport.

"I really think that BlackBerry's future is around being known for reliability and security," said Hill. "Years ago they dabbled in satisfying consumers and they found that was harder than expected. I think they are closer to zeroing in on what they will be best at. It's going to take time to rebuild their brand. They are in a rebuilding mode right now to get customers to come back around. They've had a lot of customer defection, and need to bring in customers on the software and hardware side of things. That is a long-term approach to building their business back up."

PUBLISHED DEC. 19, 2014

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