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BlackBerry Still Bleeding, Posts $4.4 Billion Third Quarter Loss

Dec 20 2013, 8:34am CST | by

BlackBerry Still Bleeding, Posts $4.4 Billion Third Quarter Loss
Photo Credit: Forbes

The battered and beaten BlackBerry isn’t any closer to a turnaround, according to its third quarter earnings report. The company behind the once-ubiquitous smartphone posted a larger-than-expected loss Friday morning, citing tax charges and restructuring costs. However, in a sign that it’s not waving the white flag just yet, the company also announced a five-year partnership with electronic-parts manufacturer Foxconn.

BlackBerry reported a massive $4.4 billion loss for its third quarter of fiscal year 2014. According to GAAP measures, this comes out to a per-share loss of $8.37, a significant jump from the $1.84 per-share loss reported this time last quarter. The mobile phone company attributed the loss to pre-tax charges associated with long-lived assets, inventory commitments and a restructuring process.

Excluding special charges, BlackBerry posted a loss of $354 million, or 67 cents per share. This missed Street expectations of a 46-cent per-share loss and was also larger than the second quarter’s loss, which came in at $248 million, or 47 cents per share, in the prior quarter.

The company’s third quarter revenue came in at $1.2 billion, down 24%, or $380 million, from the $1.6 billion it reported for the previous quarter. This marks a whopping 56% decline over this time last year, when BlackBerry posted $2.7 billion in revenue for its third fiscal quarter of 2013. The company only received 40% of its revenue from its smartphone device, which has been eclipsed by Apple's iPhone and Google's Android in recent years. (Even the company’s most loyal BlackBerry user — President Obama — has indicated wanting to migrate to one of BlackBerry’s competitors. Fortunately for BlackBerry, security reasons prevent him from doing so.)

During the third quarter, the company said, it saw revenue on 1.9 million BlackBerry smartphones, compared to 3.7 million in its second fiscal quarter.

“[T]he most immediate challenge for the company is how to transition the devices operations to a more profitable business model,” John Chen, BlackBerry interim CEO, said in a statement Friday morning. Chen took the helm of the troubled smartphone maker in November after Fairfax Financial’s buyout bid collapsed and then-chief Thorsten Heins was ousted.

Chen also said Friday morning that while the company has accomplished a lot in recent days, he and BlackBerry employees have “significant work ahead of us as we target improved financial performance next year.”

BlackBerry also announced Friday morning that it would enter a five-year strategic partnership with Foxconn,  the world’s largest manufacturer of electronic products and components. Under the agreement, Foxconn will develop and manufacture certain BlackBerry devices and manage the associated inventory. BlackBerry said the initial focus of the partnership will be a smartphone for Indonesia and “other fast-growing markets.”

Initially following the release of the the worse-than-expected earnings report, shares of BlackBerry fell 7% in pre-market trading but stabilized throughout the morning and were even enjoying a 2% bump as Friday’s opening bell approached. Year-to-date, shares of BlackBerry are down 46.7%. BlackBerry competitors Apple and Google were also enjoying a pre-market bump Friday morning, with Apple looking at an 0.37% increase and Google a 0.21% gain.

Source: Forbes

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