BlackBerry quarterly loss hits $965-million as revenue plunges 

OMAR El AKKAD-The Globe and Mail

Published Friday, Sep. 27 2013

BlackBerry Ltd.’s losses from a dismal quarter have come in at $965-million (U.S.).
The company released the final tally for its fiscal second quarter early Friday morning. Having only sold 3.7 million smartphones during the three-month period ending Aug. 31, BlackBerry posted a loss of $1.84 per share – far worse than most analysts expected, but in line with a preannouncement last week that gave investors the headline numbers from one of the worst quarters in the company’s history.

Of the total loss in the quarter, $934-million came from unsold BlackBerry smartphone inventory. The number of unsold phones was particularly high in part because the company decided not to recognize sales of certain BlackBerry 10 devices until they were sold through to consumers. Previously, BlackBerry counted sales when it shipped the phones to its retail and carrier partners, not when they were sold on to consumers. The company also took a $72-million charge related to restructuring costs and a previous round of layoffs.
Revenue for the second quarter was $1.6-billion, down 45 per cent from $2.9-billion in the same quarter of fiscal 2013, the company said.
“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 chief executive officer of BlackBerry, in a statement.
"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.”
The earnings results wrap up one of the most tumultuous weeks in BlackBerry’s history. One week earlier, the company’s stock price plummeted after BlackBerry prereleased some of the headline numbers from the most recent quarter – almost all of which were far below what even the most pessimistic analysts had predicted. BlackBerry also revealed it will cut 4,500 jobs, or roughly 40 per cent of its global work force, as it desperately seeks to cut costs.
This week, Fairfax Financial Holdings Ltd. – the Canadian investment firm that is already BlackBerry’s largest single shareholder – said it had signed a letter of intent to buy the company for $4.7-billion, or $9 a share. However Fairfax has yet to reveal where the funding for the deal is coming from, and in the days since the initial announcement, BlackBerry shares have dipped below the $8 mark, indicating that investors are not convinced the deal will go through.
Both Fairfax and BlackBerry appear confident in the deal, however. On Thursday, Fairfax CEO Prem Watsa told The Globe and Mail he is certain that funding for the buyout will come through, and that interest from potential partners is strong.
A day earlier, BlackBerry announced it will not be holding a conference call on Friday to coincide with its quarterly earnings release, in light of Fairfax’s letter of intent. Such calls are usually standard for most public companies.
The stream of negative news has all but overshadowed the release of a new flagship BlackBerry smartphone, the Z30, announced earlier this month.

http://www.theglobeandmail.com/report-on-business/blackberry-set-to-report-second-quarter-results-this-morning/article14563529/