BlackBerry restructures and partners as Q3 numbers disappoint

BlackBerry restructures and partners as Q3 loss hits $4.4B

20 DEC 2013

BlackBerry announced quarterly numbers that as expected did little to cheer, detailing a new organisational structure that includes a partnership with Foxconn intended to bolster its devices unit.

The company will focus its efforts around four operating units: Enterprise Services, Messaging (its BBM activities), QNX Embedded and Devices. And it is the last of these where BlackBerry has seen the biggest development.

The company has entered a five-year strategic partnership with contract manufacturer Foxconn, to jointly develop and deliver devices – initially “a smartphone for Indonesia and other fast-growing markets targeting early 2014”.

BlackBerry will own all of its intellectual property and perform product assurance on devices delivered through the Foxconn partnership, as it does with its current third-party partnerships.

“With the operational and organisational changes we have announced, BlackBerry has established a clear roadmap that will allow it to target a return to improved financial performance in the coming year,” John Chen (pictured), recently installed executive chairman and CEO of BlackBerry, said.

“While our Enterprise Services, Messaging and QNX Embedded businesses are already well-positioned to compete in their markets, the most immediate challenge for the company is how to transition the Devices operations to a more profitable business model,” he continued.

For the quarter to 30 November 2013, the company reported a loss of $4.4 billion, compared with a profit of $9 million in the prior-year quarter, on revenue of $1.19 billion, down from $2.73 billion.

It recognised hardware revenue on “approximately 1.9 million BlackBerry smartphones” compared with 3.7 million in the previous sequential quarter, of which “most” were BlackBerry 7-powered rather than its latest BB10 units.

The company said that approximately 4.3 million BlackBerry smartphones were sold to end customers during the period, including devices recognised before the current quarter, which reduced its inventory in channel.

But of this total, around 3.2 million were BlackBerry 7 devices, again indicating weak demand for its latest smartphones.

BlackBerry said the $4.4 billion loss included a non-cash charge against “long lived assets” of around $2.7 billion, a non-cash charge against inventory and supply commitments of approximately $1.6 billion, and restructuring charges of around $266 million.

The total of cash and investments was $3.2 billion as of 30 November, up from $2.6 billion at the end of the previous quarter, following a recent debt issue.

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Steve Costello

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