Blackberry Posts $965m Loss In Its Second Quarter

BlackBerry said on Friday that it lost $965
million in the past quarter, confirming
preliminary figures showing a rapidly
eroding picture for the Canadian
smartphone maker. The company, which had given a preliminary
estimate for its second fiscal quarter
results, acknowledged the figures were
weak, but said it hopes for a turnaround
with a planned $4.7 billion buyout, which
would take the firm private. “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. He added that the company is putting in
place “the necessary changes to create the
best business model” for its ailing product. “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,” Heins
said. “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.” Revenue for quarter ending August 31 was
$1.6 billion, down 49 per cent from $3.1
billion in the previous quarter and down 45
per cent from $2.9 billion in the same
quarter of fiscal 2013. The company said it shipped some 5.9
million smartphones in the quarter, which is
less than what Apple sold in the past
weekend in the global launch of its new
iPhones. BlackBerry has said it will cut its workforce
by some 40 per cent as it seeks to
restructure the company. Colin Gillis at the research firm BCG said
the results were “startling weak “ and may
signal the end for BlackBerry. “While we applaud the decision to focus on
retooling the company into a niche
enterprise focused business, it seems
years too late,” he said in a note to clients. “Just as the consumer business has
crumbled, the enterprise business is also in
decay in our opinion. Given the negative
news flow from the company, enterprise
customers are likely to shy away from
committing to a struggling platform.” BlackBerry was just a few years ago
considered the leader in smartphones, but
has rapidly lost ground to Apple and other
manufacturers, mainly using the Google
Android operating system. BlackBerry announced this week that it
signed a letter of intent with a group led by
Fairfax Financial Holdings Limited, which has
offered to acquire the company. Fairfax, a Canadian firm headed by
billionaire Prem Watsa, is already
BlackBerry’s largest shareholder with
approximately 10 per cent of its shares. Watsa resigned from BlackBerry’s board in
August when it announced a search for a
suitor. Under the proposed BlackBerry-Fairfax deal
the consortium would offer $9 for each
outstanding share, and Fairfax would
contribute its own shares in the transaction. A firm deal, once due diligence is
completed, is expected by November 4. It
also hinges on the consortium obtaining
financing. BlackBerry still has some 70 million
subscribers worldwide, but most of these
are using older handsets, with the newer
devices on the BlackBerry 10 platform
failing to gain traction. According to research firm IDC,
BlackBerry’s global market share was just
2.9 per cent in the second quarter, the
lowest since the firm began tracking. Because BlackBerry has some $2.6 billion
cash on hand, the Fairfax offer is worth
around $2 billion for the value of the
enterprise, analysts point out. While BlackBerry’s newest smartphones
have not sold well, analysts say its software
and services are strong, especially for
device management for companies with a
need for strong security. [AFP]