BlackBerry’s Q4 Profit Small Comfort as Revenue Slips

CEO John Chen last summer proclaimed that BlackBerry’s workforce restructuring had come to an end and that it was time for the company to grow revenue. But two quarters later, Chen’s shrewd and applauded cost-cutting efforts still haven’t been enough to outpace falling sales. Now in the second half of its turnaround, BlackBerry will focus on stabilizing revenue with sustainable profits, Chen said:

BlackBerry last week reported fourth-quarter revenue of US$660 million — well under analyst expectations, but enough to put the company back in the black.

Approximately 42 percent of that revenue came from hardware sales, about 47 percent from services, and about 10 percent from software.

BlackBerry declined to comment on which areas of the accounting sheets reassured its leadership and investors. Company officials “cannot ad lib any further” on the earnings report, spokesperson Lisette Kwong told the E-Commerce Times. 

When There’s Nothing Left to Cut

Stepping in as interim CEO of BlackBerry in the fall of 2013, Chen gave investors hope that the company’s demise wasn’t imminent.

Cost cutting and niche marketing have been hallmarks under Chen’s watch, but the latest earnings report indicates no more than a delay of the inevitable, according to Roger Entner, founder and lead analyst of Recon Analytics.

“I will miss them when they’re gone,” he told the E-Commerce Times. “They have managed to slow their decline by drastically cutting costs, but you can’t cut yourself to growth. The sad fact, remains: No matter how quickly they cut costs, their revenues are falling. A successful company grows revenues.”

It’s unclear if BlackBerry ever will be able to sustain meaningful profitability again, according to wireless analyst and consultant Jeff Kagan.

“I’d like to congratulate them on having a good quarter,” he said.

Still, “I had been hoping that they would have snapped out of this over the last several years,” Kagan added, “but they keep on disappointing.”

When There’s Nothing Left to Grip

BlackBerry’s promise makes it disappointing to see the company, quarter after quarter, fail to take big steps in reclaiming it the position it once held, Kagan said.

Since the fourth quarter of 2011, BlackBerry’s presence in the mobile OS market has shrunk dramatically — from holding onto an 8.1 percent share to clutching a 0.4 percent ledge.

“I think there’s a place for additional operating systems — customers will want that,” said Kagan. “However, [BlackBerry is] just not marketing it well or selling it well. I hope they can turn that around.”

When There’s Nothing Left to Sell

BlackBerry’s fourth quarter saw the movement of about 1.3 million of its smartphones, down from the roughly 2 million it sold in the fourth quarter of the previous year.

Its square-shaped Passport, released in September of last year, bore the flag of the company’s latest hardware strategy. The 4.5-inch phone was launched to appeal enterprise users — the same group that helped BlackBerry blossom into a mobile powerhouse until the second half of the last decade.

The Passport flew out of warehouses and spent little time on shelves shortly after launch. While it sold out quickly, BlackBerry had released just 200,000 of the handsets at launch. To put that into perspective, the latest iPhone sold about 10 million units in three days.

BlackBerry declined to provide details on the handsets it moved in its fourth quarter, but said that it intended to expand its distribution capabilities.

BlackBerry may never say never, but its time may be running out, nevertheless.

“They turned around part of the story,” said Kagan, “but that’s not enough.”

YouTube on Friday announced that it would begin supporting Ultra High Definition 4K video content

YouTube on Friday announced that it would begin supporting Ultra High Definition 4K video content. YouTube officially unveiled the news via TestTube, an incubator for new features concocted by its so-called mad scientists.

YouTube developers have posted six experimental videos that can be streamed at up to 2160p — essentially a resolution of 3,840 x 2,160. The videos support 60 frames per second, and thus are sharper and smoother than the common frame rates of 24fps and 30fps.

Serious Hardware

To appreciate the video content in all its glory, viewers need to have some serious computer hardware — including a monitor at that can support the 4K resolution. However, the six videos still can be viewed using less-impressive equipment, albeit at a lower resolution and frame rate.

“It’s definitely mainly for hobbyists at the moment,” said Joel Espelien, senior analyst at The Diffusion Group.

It will be necessary to clear other hurdles to watch the videos on a TV.

That will require “an updated YouTube app running natively on a 4K smart TV,” Espelien told TechNewsWorld.

“None of the standalone boxes support 4K yet,” he noted, “but keep your eyes on the new Apple TV later in the year. If that supports 4K, it will be a game changer for 4K video apps from a variety of folks.”

Ahead of the Game

4K has been touted as the next step in video evolution. However, given that the transition from analog to digital TV, which included the HDTV rollout, was completed only five years ago, it is unlikely that broadcast and cable networks are eager to do it again with an upgrade to 4K.

Yet online streaming services and even satellite pay-TV services now are actively exploring 4K delivery.

“4K is not an immediate requirement for any video service per se,” said Greg Ireland, research director of multiscreen video at IDC.

“YouTube can go on without it; Netflix too,” he told TechNewsWorld.

“However, 4K is another facet of the overall consumer experience — or potential consumer experience — and services that seek to stay established as market leaders will want to be at the forefront across these facets — 4K included,” Ireland added.

4K Adoption

TV makers are pushing the sets, which has created a chicken-and-egg scenario in which adoption of a new product is tied to content, and content is limited due to insufficient product adoption. However, some content providers could see an opportunity to get in on the ground floor of something potentially big.

“With prices on 4K TVs continuing to come down and visibility increasing at retail and in mass media, earlier movers on 4K have an opportunity to gain a competitive edge and attract eyeballs as adoption ramps up,” explained Ireland.

“We saw this in the early days of HD as certain pay TV providers, such as DirecTV, had a period of meaningful differentiation vis a vis the cable competition,” he recalled.

“For Web-based services, there are fewer barriers than with managed traditional pay-TV services, which need to provision the bandwidth requirement to offer 4K channels or on-demand content,” Ireland pointed out.

Offering 4K also could help YouTube stand out and gain traction at a time when it needs it most.

“YouTube has struggled with its premium content business, and while most of their content doesn’t require 4K, shooting music videos in 4K could be cool — and low-hanging fruit that would work well for them with their Vevo partnership,” said Espelien.

“For YouTube specifically, other factors may be in play,” he added, “ranging from proving the platform is ready to support the hosting of 4K content and continuing development of Google’s codec technologies.”