Third Quarter Loss Comes in at $4.4 Billion in Fiscal 2014 for BlackBerry

By Joe Rizzo December 20, 2013

There is no denying that BlackBerry is going through a rough patch. I do realize that saying it like that is quite an understatement, however there has been quite a bit going on at that company. It has been less than a year since Research in Motion (RIM) officially changed its name to BlackBerry. It has been almost 11 months since BlackBerry skipped versions 8 and 9 of its operating system and jumped to the new BlackBerry 10.

You will notice that I left out the word “improved” in that description. That could be one of the things that has attributed to the fact that as we reach the third quarter for fiscal 2014 that BlackBerry continues to lose money.

In September, I told you that BlackBerry’s Q2 fiscal 2014 results showed a $965 million loss. Of course this was also the time that potentially the company was up for sale, so that could have had some influence over the situation. The third quarter unfortunately appears to be much worse with the net loss recorded at $4.4 billion. This relates to a net loss of $8.37 per share.

So what can account for this? According to BlackBerry, there was a $2.7 billion charge on long-lived assets, a $1.6 billion write down on inventory (which interestingly enough was BlackBerry’s earnings in Q2), and $266 million in charges related to the massive restructuring that it has been going through.

Now if you remove what can be considered “one time charges” BlackBerry is posting a net loss of $354 million. This is still better when compared to the $965 million in the second quarter. On the revenue side, the company books list $1.2 billion. This is also down from Q2’s $1.6 billion.

Continuing on the financial side, it does look like BlackBerry’s cash reserve has increased to $3.2 billion, up from $2.6 billion last quarter. Now, we do have to keep in mind that at the beginning of November BlackBerry received a $1 billion investment from a group of investors led by Fairfax Financial.

A lot has been going on over at BlackBerry since the early November. John Chen took over as interim CEO and he has been cleaning house. A healthy chunk of BlackBerry’s executive ranks have been let go. There have been many changes, with a lot more to come. So you can see that rather than being focused on revenue, the company is intently focused on restructuring in an attempt to open the revenue stream.

Some of the other possible changes are having another company manufacturing BlackBerry devices. In a statement, John Chen said, "The most immediate challenge for the company is how to transition the devices operations to a more profitable business model."

With that in mind, it was announced today that BlackBerry is entering in to a five year partnership with Foxconn. You may remember it as the Taiwanese company that assembles devices for Apple. Foxconn will jointly develop and manufacture certain new BlackBerry devices and manage the inventory of them in its many factories in China.

Since the beginning of the summer, I have been telling people that I felt that BlackBerry was shying away from its smartphones in favor of BlackBerry Enterprise Server (BES) 10. It is good to know that my precognitive abilities haven’t failed me. In talking about BlackBerry, Chen said that it is putting more emphasis on BlackBerry’s software business than its hardware business.

When you look at the fact that of the 3.7 million smartphones sold in Q2, most of them were the older OS 7 models. I have to say that I received one of the first Z10 smartphones. While I was very excited about the new device, I was disappointed in the operating system.

There were a lot of things that I grew to love in version 7 that were very noticeably missing in BlackBerry 10. They were basic functions that should have been included in the new OS. In the course of following months there were various updates. Unfortunately, most of these updates did not give me the functionality that I used to have.

Be that as it may, the news today is that BlackBerry continues to show a loss. One of the areas that it hopes to make some gains is software. Its BlackBerry Messenger for iOS and Android software continued to make inroads.

It has clocked 40 million new registrants over the last 60 days. Over a dozen OEMs, including LG, have committed to preloading BBM onto their devices. BBM Channels, its enterprise social media platform, is now home to over 250,000 channels.

We can see that there is still some potential for BlackBerry. It does appear that the company is going to continue to make major changes under the interim CEO leadership of John Chen, but only time will tell. However, shares of BlackBerry fell 7.2 percent, or 45 cents, down to $5.80 in today’s premarket trading.




Edited by Cassandra Tucker

TechZone360 Contributing Writer

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