BlackBerry confirms bleak quarterly results, including $965M loss

As it had warned, BlackBerry (NASDAQ:BBRY) posted dismal quarterly results for its fiscal second quarter, including a $965 million loss. The company warned about the results last Friday and on Monday said it had struck an initial and tentative $4.7 billion deal to go private.

The company's loss was primarily due to a $934 million charge it took related to unsold inventory of its Z10 smartphone, the touchscreen model running the BlackBerry 10 software, which the company had hoped would revive its fortunes. Excluding that charge and restructuring costs of about $72 million, BlackBerry still lost $248 million in the quarter, which ended Aug. 31.

Even more troubling was the company's collapse in revenue. BlackBerry had sales of $1.57 billion in the period, down from $2.86 billion in the year-ago quarter. Ahead of the profit warning, analysts had expected revenue of twice what the company wound up reporting.

During the second quarter the company recognized just 3.7 million BlackBerry smartphones sales. Most of the units recognized were older BlackBerry 7 devices, the company said, "in part because certain BlackBerry 10 devices that were shipped in the second quarter of fiscal 2014 will not be recognized until those devices are sold through to end customers."

BlackBerry announced last Friday that it will cut 4,500 jobs, around 40 percent of its workforce. The company also signaled it will move away from the consumer smartphone market. Then, on Monday, a consortium led by Fairfax Financial Holdings, BlackBerry's largest investor, said it had signed a letter of intent to take BlackBerry private in a $9 per share deal that values BlackBerry at $4.7 billion.

"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. The company cancelled its previously scheduled earnings conference call following the Fairfax announcement.

Fairfax Financial CEO Prem Watsa said earlier this week he has confidence in both his ability to get the deal done and BlackBerry's future prospects. The companies have until Nov. 4 to conduct due diligence and in the meantime BlackBerry can shop for another buyer. The consortium also does not yet have the financing in place for the deal.

One company that is not so confident in BlackBerry is manufacturing partner Jabil Circuit, which gets around 12 percent of its business from BlackBerry, according to AllThingsD. "We are faced with a strong possibility of disengaging with BlackBerry," Jabil CEO Mark Mondello said Wednesday during the company's quarterly results earnings conference call. "Our team has worked diligently over the past few days to comprehend the recently announced changes. … We're in discussions right now on how we're going to wind down the relationship."

Meanwhile, BlackBerry unveiled the BlackBerry Messenger chat applications for Windows at its BlackBerry Jam Asia 2013 event in Hong Kong. The company also hinted that BBM for OS X was a possibility, according to The Next Web. This week BlackBerry said BBM for Google's (NASDAQ:GOOG) Android and Apple's (NASDAQ:AAPL) iOS are on hold for at least a week after an unreleased version of the Android app leaked online.

For more:
- see this release
- see this WSJ article (sub. req.)
- see this NYT article 
- see this CNET article
- see this AllThingsD article
- see this Reuters article
- see this The Next Web article 

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