Smartphone and security software vendor BlackBerry had a challenging fourth-quarter fiscal 2016, with GAAP revenue dropping to $464 million from $660 million a year ago and its net loss rising to $238 million from a net income of $28 million one year prior.
For the full year ending Feb. 29, 2016, BlackBerry reported GAAP revenue of $2.2 billion, which is down 35 percent from the $3.34 billion in revenue it reported one year ago, according to the company's figures, which were released on April 1 in a conference call with analysts. The GAAP revenue reflected a purchase accounting write down of deferred revenue associated with recent acquisitions.
The company reported a loss of 45 cents per share for the fourth quarter, compared to earnings of five cents per share one year ago.
Worse for the company was that its reported Q4 revenue of $464 million was $99 million lower than the $563.1 million expected by a survey of Thomson Reuters financial analysts.

Non-GAAP revenue totaled $487 million for Q4, while its non-GAAP net loss was $18 million, or a loss of three cents per share. The non-GAAP revenue breakdown for the quarter was about 32 percent for software and services, 29 percent for service access fees and 39 percent for hardware and other revenue.
John Chen, the company's CEO, said during the earnings call that "smartphone sales were below company expectations, partly due to delays in contract negotiations with carriers, including Verizon, about its Android-based Priv device," according to an April 1 story by Reuters. "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," Chen said in the call.
The Q4 revenue figures are also lower than the $548 million in GAAP revenue reported in the third fiscal quarter in December 2015, according to an earlier eWEEK story. That $548 million in revenue was up substantially from the $490 million the company took in during the second quarter, but is much lower than the $793 million in revenue that it reported for the fiscal third quarter in December 2014.
BlackBerry's business has been changing in the marketplace and Chen continues to transform the company into a security software company to find new revenue growth as its hardware business continues to shrink.
That change might be coming even faster than expected, according to several IT analysts who spoke witheWEEK.
"It looks like they are on track to pivot from a hardware to a software company," Rob Enderle, principal analyst of Enderle Group, wrote in an email reply to an inquiry. "This is still a painful transition but they are making strong progress and the Blackberry of today looks very different from the one that we had three years ago."

One challenge for BlackBerry is that another IT company, the former Sun Microsystems, previously "tried a similar transition and failed miserably, suggesting it really takes someone who understands both the old and new businesses to pull something like this off," wrote Enderle.
Another analyst, Charles King, principal of Pund-IT, wrote that the company's "significant loss" appears to be the result of "the apparent failure of the Priv, arguably BlackBerry's best handset in years."

The Priv, which was released in November 2015, is the company's first-ever Android enterprise smartphone. It features a 5.4-inch curved glass touchscreen display and a slide-out QWERTY keyboard, all intended to entice new users who want a different kind of phone with touch-screen capabilities. The Priv was created with a try to reclaim some of its hardware market share that BlackBerry has lost to Android phones and Apple's iPhones. BlackBerry, which has stood fast with its own operating system for its products for years, made a huge shift by releasing an Android phone, but was in a position of having to try something new to remain relevant as a smartphone maker.
King wrote that Chen's comments about poor sales of the Priv being due to distribution issues and failure to ink contracts with major wireless companies aren't adequate. "BlackBerry is walking such a narrow tightrope that nurturing and growing those partnerships should have been top of mind for the company's leadership," wrote King.
"Chen repeated his claim that if handset sales didn't improve, that there would be a way forward as a software-only company," King wrote. "However those scenarios play out, BlackBerry's transition from one-time smartphone leader to industry punching bag is one of the most remarkable and dispiriting transformations in the history of IT."

Patrick Moorhead, principal analyst at Moor Insights & Strategy, wrote in an email reply that "Blackberry is in an incredibly awkward place right now where hardware revenue has significantly decreased while at the same time pivoting to software and services. While software is growing, it's not enough to refill the lost hardware revenue."
BlackBerry's fall from dominating the enterprise smartphone market has been swift and stunning. In early 2006, before the first iPhones appeared from Apple, half of all smartphones sold were BlackBerry models. By 2009, though, its share of the global smartphone market was down to 20 percent. The company continues to face growing competition from Apple, Samsung, Google and others.