BlackBerry shares dropped more than 10 per cent as the company reported a profit of US$671 million in its latest quarter, but saw revenue fall short of expectations.

Despite the improvement on the bottom line, BlackBerry, which keeps its books in U.S. dollars, said revenue for the quarter fell to $235 million compared with $400 million a year ago.

Analysts had expected revenue to come in at about $264.39 million for what was the company's first quarter, according to Thomson Reuters.

BlackBerry shares on the Toronto Stock Exchange fell 10.23 per cent or C$1.50 to C$13.16 in early trading.

Chief executive John Chen said he expects licensing revenue and that of some software services to increase in the latter half of the company's financial year.

"It's going to be more of a second-half growth, I think," Chen told a conference call with financial analysts Friday.

He reiterated he's still expecting growth in the company's software and services business -- its focus since it exited the hardware business last year -- to be at or above the market, in the range of 10 to 15 per cent.

The company plans to release Radar light, a version of its trailer and other container tracking solution, in the fall, he said. The move will grow the market for Radar from eight million units to 28 million.

Chen also announced FedEx is using Radar for its customer critical service.

BlackBerry said Friday it earned $671 million or $1.23 per diluted share in the quarter ended May 31, boosted by a one-time payment received as a rebate from Qualcomm -- one of its suppliers -- after an arbitrator ruled in BlackBerry's favour.

That compared with a loss of $670 million or $1.28 per diluted share in the same quarter a year earlier.

The company's cash balance is now $2.6 billion.

Chen said the company plans to use its cash partly for acquisitions, saying it may look for a company or companies that can expand BlackBerry's market reach, as well as buying back shares. The company announced Friday it will purchase up to 31 million of its common shares.

Despite the pullback in BlackBerry's shares, they are still up since April, helped by speculation it could be a takeover target and its stock could rise substantially in the future.

Citron Research published a report saying BlackBerry is a likely buyout target at a sizable premium, now that its transition from hardware maker to software company is nearly complete.