By Euan Rocha and Alastair Sharp

TORONTO (Reuters) - BlackBerry's market capitalization plunged by more than 25 percent on Friday after the smartphone maker reported dismal quarterly results, prompting deeper investor skepticism of the company's long-promised turnaround.

BlackBerry, which has struggled to claw back market share from the likes of Apple Inc's iPhone, Samsung Electronics Co Ltd's Galaxy phones and other devices powered by Google Inc's Android operating system, reported a loss in the fiscal first quarter ended June 1, and said sales of its make-or-break new line of devices were softer than expected.

The company also said it will not make an operating profit in the current quarter.

BlackBerry shares were down 27.3 percent at $10.53 on the Nasdaq on Friday afternoon, touching levels last seen in November 2012, before the launch of the new BB10 range of smartphones.

"They're not the high-end provider anymore, they're not Apple, they're not the low-end provider, they're not Nokia, so they are in the middle and they do relatively low volumes," said Daniel Ernst, analyst at Hudson Square Research in New York.

"It's difficult to make great margins on that kind of volume - so I would say the outlook is quite negative them."

BlackBerry invented the concept of on-the-go email more than a decade ago with clunky little devices with a mini keyboard. The gadgets, which offered powerful security features, allowed the company to corner the lucrative market serving business and legal professionals as well as government workers.

But many in that market are now moving to other devices, leaving BlackBerry struggling to make its mark both at the top and the bottom of a competitive smartphone market.

BlackBerry said it shipped 6.8 million smartphones in the quarter, including about 2.7 million BB10 devices. This fell shy of market expectations of more than 3 million shipments for its new Z10 and Q10 smartphones. The first-quarter results and revenue figures also missed analyst estimates.

By comparison, Apple shipped 37.4 million iPhones in the March quarter, up from 35.1 million a year ago.

"I'm confident in the future of BlackBerry 10 but there's lots of work to do," Chief Executive Thorsten Heins conceded on a conference call. "This is a marathon. And with the financials that we have under our belt, we are ready to run that marathon."

On the bright side, BlackBerry's cash position rose to $3.1 billion as of June 1, up about $200 million from the final quarter of the last fiscal year. The company has no debt.

Waterloo, Ontario-based BlackBerry reported a net loss of $84 million, or 16 cents a share in the quarter. That compared with a year-ago loss of $518 million, or 99 cents a share.

Excluding one-time items, BlackBerry reported a loss from continuing operations of $67 million, or 13 cents a share, on revenue of $3.1 billion.

Analysts, on average, had expected a profit of 6 cents a share, on revenue of $3.36 billion, according to Thomson Reuters I/B/E/S Estimates.

But BlackBerry also reported steep decline in revenue from its high-margin service business, the monthly fees BlackBerry collects for providing data and security services to customers.

Those fees had been expected to fall. But the company said the decline was steeper than forecast, because of Venezuelan currency restrictions, which also hurt overall earnings by some 10 cents a share.

TOO LITTLE, TOO LATE

BlackBerry launched two new BB10 smartphones this year, the touch screen Z10 device and then the Q10, which includes the mini keyboard many BlackBerry users still covet, as well as a less expensive Q5 keyboard device targeted at emerging markets.

But the Z10 only hit store shelves in the crucial U.S. market in late March, while the Q10 device reached the United States only after the quarter had ended.

BlackBerry said it plans to unveil one more lower-priced phone running on its old BlackBerry 7 platform later this year, as it tries to keep market share in price-sensitive emerging markets that are flooded with cheap Android devices.

The company forecast an operating loss in the current quarter, as it boosts marketing spending on its new devices.

BlackBerry did not provide a detailed outlook for the rest of the year, saying the smartphone market remained highly competitive, making it difficult to estimate units, revenue and levels of profitability.

It also said it would not supply subscriber numbers going forward, as the changes in its revenue model make the numbers less relevant than in the past.

(Editing by Janet Guttsman, Frank McGurty and Matthew Lewis)

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