BlackBerry’s nightmare quarter: the hard facts

BlackBerry has today posted an extraordinary quarterly loss of $4.4 billion – most of it attributed to write-offs against stock and long-term assets.

BlackBerry's nightmare quarter: the hard facts

These are undoubtedly dire times for the smartphone maker, but just how bad are the underlying performance figures? Below we break down the key facts about BlackBerry’s financial performance.

Smartphone sales

BlackBerry sold 4.3 million devices to end users during the third quarter of 2013. That sounds like a reasonably healthy figure, until you remember that in Q3 2011 it sold 14.2 million handsets.

Perhaps the most depressing aspect of BlackBerry’s current handset sales is that 3.2 million of the 4.3 million devices sold were running BlackBerry 7. That means the firm’s current operating system, BlackBerry 10, released in January this year, still accounts for barely a quarter of handset sales.

That might partly explain why the company took a $2.6 billion write-down on inventory and supply chain commitments. However, it may also be clearing stock after signing a five-year deal with Chinese manufacturer Foxconn to jointly design and manufacture handsets over the next five years.

Revenue

Revenue for Blackberry’s third quarter totalled $1.2 billion, compared to $1.6 billion in the previous quarter, and $2.73 billion a year ago. In 2011, that figure was $5.5 billion.

At this rate of attrition, it’s likely that BlackBerry’s revenue will dip below $1 billion in the next quarter. The last time the company’s revenues were that low was 2007.

Earnings

Underlying earnings, excluding write-offs, weren’t earnings at all, but a loss of $354 million. That compares to a loss of $248 million in the previous quarter and a profit of $9 million this time last year. You don’t need to draw a graph to see which way these figures are heading.

CEO John Chen, acknowledging the seriousness of the situation, said the immediate challenge facing the company was “how to transition the Devices operations to a more profitable business model”. That Foxconn deal appears to be his solution.

Reasons to be cheerful?

It’s hard to be upbeat about BlackBerry’s prospects after such a set of results, but there was some brighter news.

The new BlackBerry Messenger (BBM) apps for Android and iOS have attracted 40 million registered users in two months. Unfortunately, since they’re free, it’s not immediately clear how BlackBerry can generate revenue from those users, other than through in-app advertising.

The earnings statement also revealed that BlackBerry still has $3.2 billion of cash sitting in the bank. However, it won’t take many more quarters like this one to see that evaporate.

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