BlackBerry posts $1bn quarterly loss
Toronto, September 28, 2013
BlackBerry Limited has reported a quarterly loss of nearly $1 billion, in line with last week's warning, days after accepting its largest shareholder's tentative $4.7 billion bid to take it out of the public eye.
BlackBerry, which had warned of poor results on September 20, said its net loss for the second quarter ended on August 31 was $965 million, or $1.84 a share. Revenue fell 45 per cent to $1.6 billion from a year earlier.
The loss included a writedown of about $934 million for unsold Z10 phones, a touchscreen model that the company had hoped would reverse its fading fortunes. The phone has sold badly with business and consumer customers alike.
"This write-off is very real," said Morningstar analyst Brian Colello. "They bought a lot of inventory hoping to sell it. The auditors were not convinced that BlackBerry can sell it or sell it at prices that the company was hoping for. We see no reason to be more optimistic than them."
Excluding the Z10 writedown and restructuring costs, BlackBerry reported a loss of $248 million, or 47 cents a share.
The company plans to shed 4,500 jobs, or more than one-third of its workforce, as it shrinks to focus on corporate and government customers.
It will not host the typical post-results call for investors after signing a tentative $9-a-share agreement to be acquired by a consortium led by Fairfax Financial, its largest shareholder, on Monday.
The Waterloo, Ontario-based company's steep revenue decline and mounting losses have revived fears that BlackBerry, a pioneer in the smartphone sector, faces an ignominious death.
"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," chief executive Thorsten Heins said in the earnings statement.
The company said it had sold 5.9 million mostly older-model phones in the quarter but only recognised revenue from 3.7 million, given that many sales had already been booked. By contrast, Apple sold 9 million of its new iPhone 5C and 5S models in the three days after launch.
Shares of BlackBerry rose 2 per cent to $8.11 in trading before the market opened. The stock remains far below Monday's bid price, indicating doubts that the Fairfax deal would be completed or a rival offer would emerge.
BlackBerry said last week it would no longer market its devices to consumers, instead focusing on the professional users that brought its first success and won the little devices the moniker "Crackberry" for their addictive nature.
That retreat from the consumer market has already had an impact. Telecom operator T-Mobile US said it would no longer stock the devices in its stores, instead shipping them to anyone who come in to order a BlackBerry.
Sprint Corporation, one of T-Mobile's larger rivals, will take a "wait-and-see" approach.
One of BlackBerry's main contract manufacturers, Jabil Circuit, said it probably would part ways with the company, its second-largest customer.-Reuters
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