BlackBerry sales disappoint as just 2.7 million z10s and q10s are sold

Sales at lower end of expectations send BlackBerry shares crashing - despite 10 per cent revenue increase

Sales of BlackBerry's 10-series devices weighed in at just 2.7 million in the last quarter - at the lower end of financial analysts' expectations.

The news, conveyed as the company delivered its quarterly financial results, provoked a sharp fall in the company's stock price of more than 25 per cent. The disappointing results, however, had been anticipated on the stock market given the high level of shorting of the company's stock in the run-up to the announcement.

The 10-series devices, featuring its new (long-awaited) BlackBerry 10 operating system with full support for touch screen input, were launched earlier this year, starting with the full-touch-screen z10 and followed up by the BlackBerry-style keyboard-bearing q10 in April.

Although a budget device called the q5 was also launched, BlackBerry was criticised for pricing its new products too high - the z10 was initially around £550 and the q10 £100 more. The z10 has since been cut in price, while output of the q10 hasn't yet been ramped up.

Critics have also suggested that while the new operating system is perfectly competent, it was late to market and lacks sufficient distinguishing characteristics to make it stand out from the Apple iPhone and competitive Android devices.

News about BlackBerry's sales coincided with its first fiscal quarter 2014 results. It reported revenue up 9.4 per cent to $3.07bn compared to the same quarter in 2013. The revenue breakdown for the quarter was about 71 per cent for hardware, 26 per cent for services and three per cent for software and other revenue.

In total, it shipped 6.8 million smartphones, up by 13 per cent compared to the previous quarter, and 100,000 PlayBook tablet computers.

The company also reported positive cash flow of $630m, helping the company to increase its cash and cash equivalents from $2.9bn to $3.1bn, indicating that the financial crisis that has convulsed the company for two years is over.

In accounting terms, it booked a loss of $84m for the quarter, down from a loss of $510m in the quarter to the end of March 2013.

"During the first quarter, we continued to focus our efforts on the global rollout of the BlackBerry 10 platform. We are still in the early stages of this launch, but already the BlackBerry 10 platform and BlackBerry Enterprise Service 10 are proving themselves to customers to be very secure, flexible and dynamic mobile computing solutions," said Thorsten Heins, president and CEO of BlackBerry.

"Over the next three quarters, we will be increasing our investments to support the rollout of new products and services, and to demonstrate that BlackBerry has established itself as a leading and vibrant player in next-generation mobile computing solutions for both consumer and enterprise customers," he added.