New York: BlackBerry Ltd. reported a narrower loss than analysts estimated, as cost cuts and asset sales helped drive the smartphone maker’s turnaround under a new boss. The shares rose.

BlackBerry reported on Thursday a loss of 11 cents a share in the fiscal first quarter, excluding one-time items, better than the 25-cent loss predicted by analysts on average, according to estimates compiled by Bloomberg. Sales in the quarter that ended 31 May were $966 million. Analysts had estimated revenue of $954 million.

Chief executive officer John Chen, who took over in November, is limiting the company’s dependence on its declining smartphone business while trimming expenses and focusing on business customers, software and mobile services like its BBM instant messaging. The shift is key to Chen’s goal of returning the company to profit by the fiscal year that ends in March 2016 as he tries to save the patient. Last month he said the odds of a turnaround were 80-20, up from a previous prognosis of 50-50.

This shows stability in the business, said Daniel Chan, an analyst with Scotia Capital in Toronto. If this goes right, growth could be the next stage, he said. Chan has the equivalent of a hold rating on the stock.

BlackBerry shares rose 11% to $9.20 at 7:27 am New York time in early trading. The stock was up 11% this year as of Wednesday’s close.

Net income in the quarter was $23 million, compared with a loss of $84 million a year ago.

Cost cuts

CEO Chen’s cost-cutting campaign has included selling most of the Waterloo, Ontario-based company’s property in Canada, eliminating jobs and moving phone production to Foxconn. The company said adjusted operating expenses were down 57% from a year ago.

Chen also reiterated his forecast to reach break-even cash flow by the end of this fiscal year.

BlackBerry had $2.7 billion in cash and short-term investments as of 31 May, up from $2.5 billion at the end of the previous quarter. Long-term debt fell to $1.34 billion from $1.63 billion in the fourth quarter.

Over the past six months, we have focused on improving efficiency in all aspects of our operations to drive cost reductions and margin improvement, Chen said in the statement. Looking forward, we are focusing on our growth plan to enable our return to profitability.

Smartphone sales

Chen is under pressure to stimulate new growth from software and secured communications fast enough to offset declines in phone sales. He’s aiming for new business in mobile data services like BlackBerry Messenger, network security for all mobile devices and a bigger role in connecting everything from heart monitors to automobiles to the Internet as mobile service spreads beyond phones and tablets.

BlackBerry recognized revenue on 1.6 million smartphones in the fiscal first quarter, helped in part by the introduction of the lower-priced Z3 phone in Indonesia last month. Mark Sue, an analyst at Royal Bank of Canada, predicted 1.5 million, and Rod Hall, an analyst with JPMorgan Chase & Co., estimated 1 million phones sold.

In general, BlackBerry’s share of the smartphone market is quickly vanishing. The company’s global shipments are projected to fall almost 50% this year to about 9.7 million smartphones, according to a forecast in May from research firm IDC.

BlackBerry’s worldwide market share will slide to 0.8% in 2014 and may slip to 0.3% by 2018, IDC said. The company’s operating system accounted for 1.9% of the market in 2013. As recently as late 2010, its global market share was 19%.

Chen said in an April interview that he’s giving the company six to eight quarters to replace declining hardware sales with higher-margin software revenue. In the first quarter, 39% of revenue came from hardware, while 54% of sales were generated by services. BLOOMBERG