By Alastair Sharp and Allison Martell
TORONTO, Sept 27 BlackBerry Ltd
reported a quarterly loss of nearly $1 billion on Friday, in
line with a warning it gave last week, just days after the
smartphone maker accepted its largest shareholder's tentative
$4.7 billion bid to take it private.
The report showed Blackberry turned in a particularly limp
performance in Latin America, a region it recently touted as a
enthusiastic supporter of its devices.
The company, which warned on Sept. 20 that the poor results
were coming, said its net loss for the second quarter, ended on
Aug. 31, was $965 million, or $1.84 a share.
Revenue fell 45 percent from a year earlier to $1.6 billion,
and BlackBerry's cash pile - made up of cash and equivalents,
short and long-term investments - fell by more than $500 million
to $2.57 billion.
Its shares were little changed by early afternoon. Investors
absorbed the shock of the drastic revenue decline last Friday,
when a pre-announcement about the dismal results slashed 17
percent from the Canadian company's market value.
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 businesses and consumers 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."
The sharpest decline in BlackBerry's sales came in Latin
America. After four quarters of revenues of around half a
billion dollars in that region, sales sank to $196 million. In
previous quarters BlackBerry had said Venezuela was a strong
market. The company does not provide sales data beyond the
Excluding the Z10 writedown and restructuring costs,
BlackBerry reported a loss of $248 million, or 47 cents a share.
It gave no forecasts for its current quarter.
BlackBerry 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 did not host the typical post-results
call for investors after signing a tentative $9-a-share
agreement to be acquired and taken private by a consortium led
by Fairfax Financial, its largest shareholder, on
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
BlackBerry said Heins was not available for an interview.
The company said it had sold 5.9 million mostly older-model
phones in the quarter but only recognized revenue from 3.7
million, given that many sales had already been booked. By
contrast, Apple Inc sold 9 million of its new iPhone 5c
and 5s models in the three days after it was launched.
BlackBerry, which in June said subscriber numbers fell to 72
million from 76 million in the previous quarter, did not update
the number this quarter. It has said the figures do not capture
all BlackBerry users.
Shares of BlackBerry were up 1.6 percent at $8.08 at midday
on Friday. The stock remains below Fairfax's $9 bid price,
indicating doubt that the deal will be completed or a rival
BlackBerry said last week it would no longer market its
devices to consumers, instead focusing on the professional users
that brought it 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 Inc said it would
no longer stock the devices in its stores, instead shipping them
to anyone who came in to order a BlackBerry.
Sprint Corp, one of T-Mobile's larger rivals, said it
will take a "wait-and-see" approach.
One of BlackBerry's main contract manufacturers, Jabil
Circuit Inc, said it probably would part ways with the
company, its second-largest customer.