BlackBerry announces Q2 2014 results, takes $934m hit on ‘Z10 inventory charge’
As expected, BlackBerry today announced its dreadful Q2, 2014 results where it reported GAAP loss of $965 million on a revenue of just $1.6 billion, which declined from $3.1 billion (49 percent) from the last quarter. As reported in its preliminary announcement earlier this week, BlackBerry shipped 3.7 million smartphones in the quarter. BlackBerry reported selling 5.9 million smartphones to end consumers in the quarter, easing its inventory a bit. However, most of the sales were of older BB OS 7 devices. BlackBerry says it took a “Z10 inventory charge” of $934 million. Since this week’s announcement, BlackBerry has repositioned the Z10 and has drastically dropped its price, in the guise of festive offer in India.
Since announcing the preliminary result, BlackBerry has accepted a letter of intent from Fairfax Financial, which already owns about 10 percent of the company, for acquiring BlackBerry for $4.7 billion. In the meanwhile, BlackBerry has announced it will exit from the consumer market and will focus on prosumer and enterprise segments only. It intends to lay off approximately 4,500 employees or about 40 percent of the total base. BlackBerry says it has $2.6 billion in cash and has no debt.
“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 CEO of BlackBerry. “While our company goes through the necessary changes to create the best business model for our hardware business, we continue to see confidence from our customers through the increasing penetration of BES 10, where we now have more than 25,000 commercial and test servers installed to date, up from 19,000 in July 2013. 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. 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.”