In what might be its last earnings announcement as a public company, BlackBerry Ltd. posted its biggest quarterly loss – almost all of it due to unsold smartphones.
BlackBerry announced Friday it lost $965-million (U.S.) in the three months ending Aug. 31. Having only sold 3.7 million smartphones during that time, BlackBerry posted a loss of $1.84 per share – far worse than most analysts expected, but in line with a preannouncement last week that signalled the headline numbers in advance.
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 the phones were shipped to the company's retail and carrier partners. BlackBerry 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 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 loss announced Friday tops those posted in the first nine months of 2012, when the company lost $125-million, $518-million and $235-million in three consecutive quarters. In late December of 2011, BlackBerry also took a $485-million charge on unsold Playbook tablets in its quarterly results.
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.
Fairfax Financial Holdings Ltd., BlackBerry's largest single shareholder, announced on Monday that it signed a letter of intent to buy the company for $4.7-billion, or $9 a share. The Canadian investment firm has yet to reveal where funding for the deal is coming from, and in the days since the 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.