BlackBerry reports $965m loss, thanks to Z10 flop

BlackBerry reports $965m loss, thanks to Z10 flop

Summary: Around 5.9 million BlackBerry devices were sold in the whole of the second quarter - that's a fair chunk less than Apple's new iPhones shifted in single a weekend.

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BlackBerry has said it made a second quarter loss of $965m as its new BlackBerry 10 devices have not proved the hits it had hoped.

Its Q2 financial results, announced today, come after the compay said last week it will cut 4,500 staff and refocus on the "enterprise and prosumer market". It also signed a letter of intent under with a consortium led by Fairfax Financial Holdings, which has offered to acquire the company for $4.7bn.

According to BlackBerry's results for the three months ended 31 August 2013, second quarter revenue stood at $1.6bn, down 49 percent from $3.1bn in the previous quarter and down 45 percent from $2.9bn a year ago.

Its Q2 revenue was made up of 49 percent from hardware, 46 percent from services and five percent from software and other revenue.

The company said that during the second quarter the company recognised hardware revenue on approximately 3.7 million BlackBerry smartphones. But most of the units shipped were BlackBerry 7 devices — the company said it was in part because revenue on some BlackBerry 10 devices shipped in the second quarter will not be counted until those devices are sold on to end users later in the year.

During the quarter, around 5.9 million BlackBerry smartphones were sold to end users. In contrast, Apple sold nine million iPhones in the first weekend after the latest models were released.

Of its $965m loss for in the quarter, $934m was due to a what the company described as the "Z10 inventory charge", as the touchscreen device has failed to sell in the quantities that BlackBerry hoped.

BlackBerry's overall loss compares to a loss of $84m in the previous quarter and a loss of $229m in the year-ago quarter. BlackBerry said the total of its cash, cash equivalents, short-term and long-term investments was $2.6bn as of 31 August, compared to $3.1bn at the end of the previous quarter.

"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," BlackBerry CEO Thorsten Heins said in a statement.

BlackBerry Z30: Hands-on with BlackBerry's flagship phablet

BlackBerry Z30: Hands-on with BlackBerry's flagship phablet

BlackBerry Z30: Hands-on with BlackBerry's flagship phablet

BlackBerry continues "to see confidence from our customers through the increasing penetration of BES 10", Heins added, with more than 25,000 commercial and test servers installed to date, up from 19,000 in July last year.

"We understand how some of the activities we are going through create uncertainty, but we remain a financially strong company with $2.6bn 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," he concluded.

While BlackBerry was for a long time the undisputed leader in enterprise smartphones it has faded both dramatically and rapidly in recent years following a lack of appetite for its BlackBerry 10 devices.

Earlier this week T-Mobile, the fourth largest mobile provider in the US, said it will stop carrying BlackBerry inventory in its stores and instead ship them only via its website.

Further reading

Topics: Smartphones, Mobility, BlackBerry

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44 comments
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  • the software portion of the business is the only one growig which is 5%

    Of their business. You have to wonder though if BES can survive without a thriving handset population to manage. There are no doubt a lot of installations that will upgrade and this will most likely be the final time. {poof}
    greywolf7
    • It's a tough industry

      The fact remains, this industry is impossible. It seems that even if you were chosen by 5.9 million people, you may still lose money. A lot of it. Based on these numbers I assume that Microsoft is losing just as much being number 3 but because of their other operations are still printing money. The phone business is not healthy right now and it won’t be good in the long run. For a comparison, the car industry can be profitable for at least 25 different manufacturers right now. Not all of them are making money all the time but most are. The phone industry can be profitable for only 2 major platforms right now. Worst, buyers are very polarized and loyal to a brand. I don’t see how things can get better on that mater.
      gbouchard99@...
      • yet stats point to three players in any market

        Furthermore the player with the highest prices and most closed system has traditionally lost in the end. They survive for a while until parity renders them the niche position. A third player will emerge to thrive in the phone market just like any other market.
        greywolf7
        • Maybe it's Ubuntu

          I just read they released a final beta.
          Al Roberg
    • heres what bb needs to do

      Young people don't want a bb no differently than they want to drive a Lincoln or Cadillac.
      Since bb fortae is security and privacy, they should differentiate themselves there. They are Canadian so the us government has no say. continue porting android app compatibility so you have a proper app base but build better app security right into the os. Make it so the user can select and toggle permissions that an app requests. The ones that are denied, the os should spoof so the App doesn't crash. who wants some game stealing your contacts or transmitting your location over the net.
      That's where the big uproar has been lately, privacy. Bb is positioned for trust in that area.
      LarsDennert
      • BB privacy?

        I recall not long ago one of the Snowden releases showed that BB's private 'secure' network was *completely* hacked. You don't get do-overs when trust is lost.
        Jorj_X_McKie
  • The launch of Z10 was badly managed.

    The management has to take the blame for a badly managed launch and marketing of the Z10.

    The Z10 is very good product, I know I have one, the CEO should go.
    pjc158
    • It launched first in the UK

      and the US had to wait what a month???

      designed to fail
      everss02
    • Badly Managed - Yes. Good?

      Just after the Z10 launch in the US, I was looking for a second phone. Walked into a local Best Buy and found the Z10 on display between the Galaxy S4 and the HTC One. They were all priced relatively the same. From all perspectives; look, feel, hardware, specs; the Z10 was clearly a 2nd tier device. To have a chance, it should have been endcapped highlighting it as the premier BB.
      rhonin
      • Never judge a book by its cover

        Obviously you have not used a BB10 device, well I have one. I have also used Android and iOS, BB10 is not a 2nd tier device.

        Funny how people make statements when they know nothing.
        pjc158
        • Typical OMIF Syndrome

          So sorry. I have. Only for a couple of weeks. That said ....
          It is second tier. Take a look at the specs for the ATT version.
          Can't handle more than a 32gb sd card. The back looks and feels nice at first but quickly becomes "tacky". One week you can add Android apps, the next update no. The camera had some nice features but overall was mediocre at best. Battery - ouch! GS3 (wife's), i5 (mine) and HTC One (mine) all lasted longer. A number of common apps I use across all my devices were missing .....

          Knowing this was the "LAUNCH" of the new BB, they really missed it. Felt like I was back looking at the Win7 offerings and MS trying to claim they "were as good as ...".

          Top tier? Not by a long shot.
          rhonin
    • it was dead before it launched

      Because it was too late. They disappeared for two years to build a new platform and in the meantime lost the majority of their customers.
      greywolf7
    • Like many corporations, Blackberry is protecting mediocrity

      Heins will have an enormous severance package (like his "$50m if we're bought and I'm tossed" clause). Blackberry have a choice between a CEO who's hardly put right and a huge chunk of cash going out the door with him and replacing him with another guy who'll want the package Heins got, etc.
      dowlingm
  • How does any company currently change the mindset of customers...

    When the media basically talks only about Android and Apple? The main reason phones like anything Blackberry comes out with for consumers (for consumption purposes) and Nokia (Windows) it gets shoved to the back of the line by the likes of Apple and Samsung because thats what people are told thats whats they currently want, mainly cause the ecosystem is so rich in support and software.
    EVHGameOvR
    • Advertise!

      When was the last time you saw a BB commercial? Compare that to the last time you saw a Samsung or apple commercial.
      2low_tech
      • Mercesdes and Sky Atlantic

        The only real advertising I ever see for Blackberry is their corporate Sponsorship on Petronas AMG Mercedes F1 cars, and their sponsorship of drama on the UK's Sky Atlantic TV channel.

        The ironic thing is, Sky TV have long established streaming and downloadable content available on their Sky GO App, but not for any Blackberry OS/device - Windows PC, Mac OSX, IOS and Android only - You could not make this up.
        neil.postlethwaite
      • Look at Enterprise

        My employer offers them as a work phone at no cost to you or you can BYOD (iPhone and Android - no Win yet). Nobody wants them.
        rhonin
        • Just depends what you want from one....

          I have both a 5c and a Z10 from work. I use the Z10 all the time as it doesn't need an email APP and another secure password. I open it I sign in it works! 5c I open and sign in; then need to sign into a secure app. All depends how you want to play it. I don't use facetime or angrybirds or twitter at work so have no need of those aspects. Then again I don't want calls at night so the 5c is better placed for out of hours stuff.

          The personal market is way different than the corporate market. Many companies will stay with BES, moving onto BES10 rather than run dozens/hundreds of APP support servers and the hassle of doing that when problems crop up. BES10 is still in its infancy... lets see where we are in 6 months. Forget the personal market for the moment though, as it needs a groundswell from corporate first.

          ps Message to RIM: Please drop all the rubbish, and stick to a few phones. Nobody is interested in choosing between some crappy options... that's when they decide to just buy an iphone or android phone. Get with it before it's too late!!!!
          johnmckay
    • they will have to pay the media more than the other guy

      And give them better prostitutes or whatever converts the media agenda to their side.
      greywolf7
    • Um, how about make a phone people actually want to use

      that's always a good way to start.
      baggins_z