BlackBerry reports $965m loss, thanks to Z10 flop
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.
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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.
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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.