BlackBerry swings to profit, sells 1M Z10 smartphones

From CNET News.com: BlackBerry swung to a surprising profit in the fiscal fourth quarter amid early signs of progress with its BlackBerry Z10 flagship phone.

For the three months that ended on March 2, the Canadian smartphone manufacturer reported a profit of $98 million, or 19 cents a share, compared with a year-ago loss of $125 million, or 24 cents a share. Excluding items such as its cost-savings program, the company reported an adjusted EPS of 22 cents. Sales, however, fell by 36 percent to $2.68 billion.

More importantly, BlackBerry said it sold 1 million units of the Z10 in the period. The results only include sales from a few early launch markets. Results from the U.S., which first saw the Z10 hit the market on Friday, aren't part of the fourth quarter. In total, the company sold 6 million smartphones and 370,000 PlayBook tablets, which continue to move thanks to heavy discounting.

All eyes are on how well the BlackBerry Z10 performs out of the gate. The results represent the first solid indication of how consumers are responding to the Z10, although CEO Thorsten Heins told CNET that a true gauge of its success or failure would come after two quarters.

The company has seen its stock slump recently on the perception that the U.S. launch went off more quietly than expected, but earnings more than topped expectations. Analysts, on average, projected a loss of 29 cents a share on revenue of $2.85 billion, according to Thomson Reuters.

BlackBerry's stock is up 3.8 percent to $15.12 in early trading today.

RBC Capital analyst Mark Sue attributed the dramatic disparity between BlackBerry's profits and Wall Street's forecast for a loss to surprisingly strong gross margins, as the Z10 is a more profitable device than older models. The company said that its cost-savings program kicked in a quarter early, allowing for the early return to profitability.

"To say it was a challenging environment to deliver strong results could be the understatement of the year," CEO Thorsten Heins said during a conference call today. "But getting back to a profitable quarter is just the starting line, not the finish line."

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