Blackberry squeezed as sales slump

Canada-based Blackberry may desert the device business if its latest handset is a flop

BlackBerry sales fell by almost $200m in the three months to the end of February in a bigger-than-expected slide that sent shares down almost 8%.

The Canadian company said smartphone sales had been below projections in the quarter.

Chief executive John Chen blamed delays in negotiations with mobile networks about its Android-based Priv handset.

Blackberry reported revenue of $464m, but analysts had expected $563m.

It swung to a net loss of $238m for the quarter, compared with a profit of $28m for the same period last year.

Mr Chen said cost-cutting meant the company now needed to sell only 3 million devices a year - down from a previous estimate of 5 million - at an average of $300 apiece to break even on handsets.

"The softness at the high end of the smartphone market is certainly a headwind, but the main issue that we face and that we need to address is the distribution," he told analysts.

Blackberry has found its market for expensive handsets heavily eroded in recent years by competitors including Apple's iPhone and the Samsung Galaxy range.

It now has less than 1% of the global smartphone market and if the Priv fails to sell well it could be the last Blackberry device.

Morningstar analyst Brian Colello said: "The decline in hardware revenue is certainly a negative. We'd like to see more details into how close Blackberry is to achieving its target of profitability."

The Priv is Blackberry's first Android-based handset

Blackberry said it expected its software and services revenue to grow faster than the overall market, at about 30%.

"We have more than doubled our software business - we have clearly gained traction and market share," Mr Chen said.

Software and services accounted for just under a third of total revenues, with hardware on 39% and service access fees making up 29%.

Shares in Blackberry were down 64 cents to $7.45 in New York in morning trading. They have fallen almost a fifth since the start of the year.