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BlackBerry beats expectations with $23 million Q1 profit, revenue falls

BlackBerry CEO John Chen shows off the new Passport (left) and Classic phone models after the company's Annual General Meeting in Waterloo, Ont., Thursday June 19, 2014. THE CANADIAN PRESS/Dave Chidley

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BlackBerry CEO John Chen shows off the new Passport (left) and Classic phone models after the company's Annual General Meeting in Waterloo, Ont., Thursday June 19, 2014. THE CANADIAN PRESS/Dave Chidley

WATERLOO, Ont. - While it's still too early to brand John Chen the turnaround king, the chief executive of BlackBerry showed Thursday that he's making headway at the struggling smartphone maker.

The company delivered a surprise to investors with a US$23-million profit for the first quarter of its 2015 financial year compared with a loss a year ago, though Chen said it doesn't mean BlackBerry's survival is entirely certain yet.

"If we do well in the next quarter or two, then I'm very hopeful," he said after the company's annual meeting.

Chen stood before shareholders for the first time since taking over the helm last year and assured them the company has plenty of ideas he believes will ensure its survival — ranging from products and services angled at meeting the needs of the business and government sector to a slate of phones that includes BlackBerry's first phablet.

The BlackBerry Passport, which meets somewhere between a smartphone and a tablet in size, is scheduled to launch first in Europe this September, Chen said.

A cloud-based service from its QNX division, which develops technology for automobiles, is also part of a plan for the company to dive into the "Internet of Things," a buzzy phrase used to describe technology that connects objects to wireless networks.

"This is going to be a huge trend in five years and we're going to build up to it," Chen said.

"Everything BlackBerry does is about security — we will not lose that fight."

He also outlined his predictions that BlackBerry Messenger will start to generate revenue in the 2016 financial year.

Chen was hired last year to reshape BlackBerry,'cut costs and lead an effort to find a better footing in the highly competitive tech sector. Before he took the job, he helped turn software company Sybase into a profitable operation focused on mobile business technology.

BlackBerry is now dedicating more resources to serving business and government customers after a failed attempt to compete with Apple's iPhone and the various smartphones on the Android operating system in the consumer market.

In the short-term, analysts are still closely watching how Chen's leadership differs from his predecessors, and whether his strategy will help achieve his goal of becoming break-even on cash flow by the end of the financial year before rising to profitability in its 2016 financial year.

The latest financial results seemed to appease investors for the time being — stock in BlackBerry (TSX:BB) jumped 10.3 per cent, or 93 cents, to $9.93 in afternoon trading on the Toronto Stock Exchange on Thursday.

A number of non-cash items helped push the company to a profit of $23 million, or four cents per share, compared with a loss of $84 million or 16 cents a year ago.

On an adjusted basis, BlackBerry reported a loss of 11 cents per share, which came in above analyst estimates of a loss of 26 cents, according to Thomson Reuters.

However, revenue tumbled to $966 million for the three months ended May 31, compared with $3.07 billion a year ago.

During the quarter, BlackBerry booked revenue for about 2.6 million smartphone sales, which is an increase from 1.3 million devices a quarter earlier.

BlackBerry also boosted its cash holdings to $3.1 billion, from $2.7 billion in the previous quarter, with the help of a tax refund and money from the recent sale of real estate assets.

Shareholder Douglas Spry, who bought BlackBerry stock when it was hovering around $8 in May, said he was "quite happy" with how the company is evolving under Chen's leadership.

"He's come out with so many different avenues that he's exploring," he said.

"I don't think they'll ever be what they were before, but it'll be nice to see them become successful."

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