updated 11:07 am EST, Fri December 20, 2013
Over half of BlackBerry loss stems from asset writedowns
BlackBerry has suffered a loss of $4.4 billion for the third quarter, worse than the $965 million lost in the previous quarter and the $114 million lost in Q3 2012, the company has revealed. At the same time as the tremendous loss, the company revealed it has signed a new five-year partnership with Foxconn to create new BlackBerry devices.
A charge of $2.7 billion against assets, such as unsold BlackBerry devices, as well as other similar charges make up a considerable portion of the loss. It "recognized hardware revenue" on just 1.9 million BlackBerry smartphones in the quarter, a drop from approximately 3.7 million sold last quarter, with the bulk being cheaper BlackBerry 7 devices rather than BlackBerry 10. It notes that 4.3 million BlackBerry phones were sold to customers in the quarter, including shipments made or recognized before the quarter began, with BlackBerry 7 devices making up 3.2 million of that number. In the same quarter's results last year, it reported shipping 6.9 million smartphones and 255,000 PlayBooks.
Revenues for the period reached just $1.2 billion, down from $1.6 billion in the second quarter, and down from $2.7 billion year-on-year. Available cash totals $3.2 billion, up from the $2.6 billion the company held at the end of the second quarter.
The partnership with Foxconn will see the two companies working together on new products, with the initial focus of a smartphone for Indonesia and other "fast-growing markets," suggesting it will be a cheaper device to produce than the Z10 and Z30 BlackBerry flagships. BlackBerry will be concentrating on the design and will own all intellectual property, while Foxconn will handle the manufacturing and inventory management side.
Though the Foxconn deal is a highlight for interim CEO John Chen, it may not be enough to help the company correct its path. It has already reshuffled its management and abandoned the sale of itself in favor of accepting investment, and has laid off thousands of employees. It is unclear how much more the company has to do to right itself.