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BlackBerry posts US$4.4 billion loss in Q3

Carmi Levy

BlackBerry’s third quarter results for its 2014 fiscal year were every bit as disappointing as investors had feared, falling far below analyst projections and sparking a sharp selloff in the company’s stock in pre-market trading.

For the three months ending Nov. 30, the company reported a net loss of at US$4.4 billion, or $8.37 per share, thanks to a $2.7 billion charge on long-lived assets, a $1.6 billion writedown on inventory, and $266 million in charges related to its restructuring and strategic review processes. This compares to a GAAP loss in the year-ago quarter of $965 million, or $1.84 per share.

Excluding one-time charges, the company posted a $354 million net loss, or $0.67 per share diluted, compared to a $9 million, or $0.02 per share profit a year ago.

BlackBerry booked $1.2 billion in Q3 2013 revenue, down 24 per cent from $1.6 billion in the previous quarter, and 56 per cent from the year-ago quarter’s $2.7 billion. The results lagged analyst consensus from Thomson Reuters of $1.6 billion in revenue, or $0.44 per share.

On the positive side, BlackBerry’s cash reserves increased to $3.2 billion from $2.6 billion the previous quarter, erasing a $500 million erosion the previous quarter. Its BlackBerry Messenger for iOS and Android software continued to make inroads, clocking 40 million new registrants over the last 60 days. Over a dozen OEMs, including handset heavyweight LG, have committed to preloading BBM onto their devices, and BBM Channels, its enterprise social media platform, is now home to over 250,000 channels, some created by global brands including USA Today and Coke Indonesia.

This wasn’t enough to ease investor fears, and shares were down over 6.5 per cent before market open.

The results cap a devastating year for the Waterloo-based smartphone maker. Its near-billion-dollar loss in the previous quarter was driven by a 45 per cent drop in revenue over the previous Q2 2012 and a massive inventory writedown on backlogged Z10 smartphones. It announced plans to lay off 4,500 employees globally – or almost 40 per cent of the company – as its transition plan under now-former CEO Thorsten Heins failed to turn things around. Heins was finally ousted last month, and turnaround specialist John Chen, who turned the once-moribund Sybase into a $5.8 billion jewel in software giant SAP’s crown, was brought in to clean up the mess.

All eyes now look to Chen as the company tries to turn investor focus to its 2014 turnaround plans.