Following its Q2 FY2014 preliminary report a week ago, today’s dire financial results for BlackBerry are not a surprise. As expected, BlackBerry reported revenues of US$1.6 billion, down 49% from the US$3.1 billion reported the prior quarter, and an operating loss of US$965 million.
BlackBerry sold 3.7 million smartphones over the quarter. Once again, the majority were older BlackBerry 7 devices “in part because certain BlackBerry 10 devices that were shipped in the second quarter of fiscal 2014 will not be recognized until those devices are sold through to end customers.” At the same time, some 5.9 million customers picked up BlackBerry smartphones over the quarter, helping reduce BlackBerry’s channel inventory.
As expected, a large portion of the company’s loss was due to poor sales of the BlackBerry Z10. It incurred a US$934 million inventory writedown charge, the “Z10 Inventory Charge” as it calls it.
“We are very disappointed with our operational and financial results this quarter and have announced a series of major changes to address the competitive hardware environment and our cost structure,” said Thorsten Heins, President and CEO of BlackBerry. “While our company goes through the necessary changes to create the best business model for our hardware business, we continue to see confidence from our customers through the increasing penetration of BES 10, where we now have more than 25,000 commercial and test servers installed to date, up from 19,000 in July 2013. We understand how some of the activities we are going through create uncertainty, but we remain a financially strong company with $2.6 billion in cash and no debt. We are focused on our targeted markets, and are committed to completing our transition quickly in order to establish a more focused and efficient company.”
On a more positive note, BlackBerry still has US$2.6 billion in cash and investments and has no debt.
Coming off an announcement of 4,500 job cuts, BlackBerry may have found itself a buyer in Fairfax Capital which has put forward a US$4.7 billion offer.
Source : BlackBerry