Ten-fold Increase in losses and halving of Q2 revenues at BlackBerry
Mumbai, India -- (SBWIRE) -- 10/09/2013 -- Waterloo, Ontario-based BlackBerry released results for its second quarter of fiscal 2014 on Friday, the 27th of September. One of the biggest highlights this quarter were reported revenues of $1.6 billion, almost half the $3.1 billion they had reported in Q1 earlier this year. Smartphone revenues also took a downward plunge, with only 3.7 million smartphones being sold this quarter versus 6.8 million shipped in the first quarter.
Friday’s results might not surprise many as BlackBerry has seen its market share and smartphone sales decline rapidly this year in the face of stiff competition from both Samsung and Apple. It has seen certain success with the Z10 & the more successful Blackberry Enterprise Services 10 or BES 10.
Adding on to the bad news, their GAAP loss from continuing operations also saw an almost ten-fold increase to $965 million or $1.84 per diluted share versus the $84 million or $0.16 per share reported in Q1. Meanwhile adjusted loss from continuing operations almost tripled to $248 million, or $0.47 per diluted share from 67 million or $0.13 per share last quarter. Commenting on their results, CEO Thorsten Heins admitted that they were disappointed with their results this quarter and had announced a number of measures in the hardware environment and cost structure.
Major initiatives in this direction include restructuring plans involving a huge reduction of approximately 4500 employees, or 40% of its global workforce. Also on the table are a 50% reduction in OpEx by the end of Q1 2015.
On September the 23rd, BlackBerry announced that it had entered into a Letter of Intent or LOI with a consortium led by Fairfax Financial Holdings to acquire the company for approximately $4.7 billion. The consortium intends to take BlackBerry private once all required conditions are met. However, BlackBerry does have the option to opt for another partner or an alternative deal if it comes up till November the 4th, by when due diligence is expected to be completed. Commenting on Fairfax’s end, CEO Prem Watsa stated that the deal would deliver immediate value to shareholders with a more focused approach on delivering superior and secure enterprise solutions to BlackBerry customers.
Would the BES 10 initiatives as well as the recently announced 40% job cuts be enough to get them back on track? This remains to be seen, though it would be obviously under careful consideration at Fairfax and CEO Prem Watsa’s end as well.
Surprisingly, BlackBerry’s share price didn’t immediately feel the ripple effects of these results, with the stock trading at $7.95 at close on September 26th and in fact rising to around $8 at 12 AM Eastern on the 27th. BlackBerry had released its Q2 2014 results at 7 AM on the 27th of September.
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