BlackBerry Posts $1 Billion Loss, Revenue Plunges

BlackBerry lost $965 million in its second quarter, the Waterloo-based smartphone manufacturer announced on Friday morning.

Of that, $934 million is due to a write-down of unsold inventory.

The losses were in-line with preliminary results the company released a week ago, predicting a loss of between $950 and $995 million.

Revenue for the three-month period that ended on Aug. 31 was down 49 per cent from the previous quarter, dropping from $3.1 to $1.6 billion.

When compared to the same period last year, revenue was down 45 per cent, dropping from $2.9 billion.

The company recorded revenue from the sale of 3.7 million smartphones during the period. The majority of those sales were BlackBerry 7 devices – not the new Z 10. The company said that revenue for sales of the new devices, which were shipped to carriers, won’t be recorded until they’re sold to end-users.

In total, 5.9 million BlackBerry devices were sold to end-users during the period.

With the massive loss being blamed largely on unsold inventory, it’s unclear whether the new devices are being rejected by consumers or cellphone carriers. T-Mobile, the fourth-largest wireless carrier in the United States, announced earlier this week that it will stop carrying BlackBerry devices in its retail stores.

But the company isn’t answering questions. A conference call that had be scheduled for Friday morning was cancelled in light of the takeover offer by Fairfax Financial.

The company still has $2.6 billion in cash and investments, but its burning through that fast. BlackBerrry spent $500 million of its cash on-hand during the 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,” Thorsten Heins, president and CEO of BlackBerry, said in a corporate release. “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.”

The company reiterated its focus on the enterprise device management market, profiling gains in that space prominently in the quarterly report. The company’s BlackBerry Enterprise Service 10 now has 25,000 commercial and test servers, up from 19,000 in July 2013.

BlackBerry suggested it’s moving away from the device market in an announcement last week, which also included plans for 2,500 layoffs before the end of its fiscal year in May 2014.

But hardware still accounts for 49 per cent of the company’s revenue.