There was plenty of nervousness from investors ahead of BlackBerry’s (NASDAQ:BBRY) fourth-quarter earnings report, but the launch of the company’s Z10 smartphone appears to have provided a nice lift — at least temporarily.
BBRY shares were headed north by about 3% in early Thursday trading — continuing a nearly 100% run in the past six months — on a somewhat mixed report.
The company earned a surprise profit of 19 cents per share (Wall Street was expecting a 29-cent loss), though the number still was a mere fraction of the 80 cents it made in the year-ago period. Revenues also were disappointing, coming to $2.68 billion vs. analyst estimates for $2.85 billion.
The momentum of the company’s new Z10 smartphone is proving critical to today’s optimism. BBRY announced that it shipped about 1 million units in the quarter — an impressive start considering the phone was only available for about a month in a handful of countries, such Canada and the U.K.
Another bright spot: BBRY’s cash position was unchanged, at $2.9 billion.
CEO Thorsten Heins has been focused on cutting costs, which has included the layoffs of about 5,000 workers in the past year, as well the shuttering of various facilities and the unloading of non-core assets. It also looks like Heins has been efficient with his marketing spend for the Z10 product launch.
Despite all this, there were definitely some red flags.
First of all, it is far from clear if the growth of the Z10 will be sustainable. The demand in North America appears tepid, as it remains tough to compete against mega-operators like Apple (NASDAQ:AAPL) and Samsung (PINK:SSNLF). That’s part of why Goldman Sachs (NYSE:GS) analysts downgraded the stock from a “buy” to a “neutral” and lowered the price target from $19 to $17.
Then there’s the tablet business — which is a joke. In Q4, the company sold a meager 370,000 units.
BBRY also had an ominous drop in its subscriber base during quarter, with the number falling from 79 million to 76 million. Unfortunately, this might be an indication that corporate customers think BBRY’s technology is not worth the cost, and as a result, it’s possible we could see more deterioration.
Still, it seems likelier that we’ll see positive momentum continue over the next couple quarters. There should be uptake from existing customers — especially from Europe and Asia — who have been waiting a long time for something new. Plus, BBRY also could get a lift from ongoing buyout rumors.
Consider that a delight for traders, who should have plenty of opportunities for quick profits.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.”Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.