Despite losing 3M subscribers, BlackBerry earnings positively surprise

BlackBerry(s bbry) service subscribers decreased to 76 million, down 3 million from a quarter ago, but cost-cutting and hardware sales helped the company earn a profit in its final fiscal quarter of the year. On Thursday, the company announced adjusted income of $114 million on revenue of $2.7 billion for the quarter.
As service revenues decrease, BlackBerry is getting more of its revenue from hardware with 61 percent of sales from smartphones and, to a lesser extent, tablets. For the quarter BlackBerry shipped approximately 6 million handsets with nearly 1 million of those being the new Z10 handset. BlackBerry recently announced a 1 million unit order for the Z10 but did not clarify how many, if any, of those are accounted for in this most recent quarter. The company shipped 370,000 BlackBerry PlayBooks during the quarter.
On its investor call, BlackBerry President and CEO Thorsten Heins said investors should remember that BlackBerry is in the middle of a phased rollout, that sales are meeting expectations and that 235 carriers have been testing the new handsets favorably.
While the new phones’ rollout, Hiens says that legacy BlackBerry handsets will continue to generate service revenues to help fund the transition. And the higher average selling price of handsets — boosted by the new Z10 — is helping to offset any decreases in hardware sales. But this point could also add to BlackBerry’s challenges going forward. Most of the company’s growth is in regions such as Latin America and Africa where the market for an expensive flagship phone could be limited.
Even if the Z10 and upcoming Q10 handsets take time to generate more sales, the company says it is in good fiscal shape, now with $2.9 billion in cash, cash equivalents and short-term and long-term investments, which is up from $2.1 billion just three quarters ago.