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Appeared on: Friday, December 20, 2013
BlackBerry Reports $4.4B Loss For 3Q, Partners With Foxconn

BlackBerry on Friday reported a massive $4.4 billion loss in the third quarter and 56 percent drop in revenue. The company also announced a parnership with Foxconn to jointly manufacture new BlackBerry devices.

Revenue for the third quarter of fiscal 2014 was approximately $1.2 billion, down $380 million or 24% from approximately $1.6 billion in the previous quarter and down 56% from $2.7 billion in the same quarter of fiscal 2013. The revenue breakdown for the quarter was approximately 40% for hardware, 53% for services and 7% for software and other revenue.

During the third quarter, the Blackberry recognized hardware revenue on approximately 1.9 million BlackBerry smartphones compared to approximately 3.7 million BlackBerry smartphones in the previous quarter. Most of the units recognized were BlackBerry 7 devices.

During the quarter, approximately 4.3 million BlackBerry smartphones were sold through to end customers, which included shipments made and recognized prior to the third quarter and which reduced the company's inventory in channel.

Of the BlackBerry smartphones sold through to end customers in the third quarter, approximately 3.2 million were BlackBerry 7 devices.

The results are the Blackberry's first under new chairman and interim chief executive John Chen.

"With the operational and organizational changes we have announced, BlackBerry has established a clear roadmap that will allow it to target a return to improved financial performance in the coming year," said John Chen. "While our Enterprise Services, Messaging and QNX embedded businesses are already well-positioned to compete in their markets, the most immediate challenge for the Company is how to transition the Devices operations to a more profitable business model."

Chen added: "We have accomplished a lot in the past 45 days, but still have significant work ahead of us as we target improved financial performance next year. However, the company is financially strong, has a broad and trusted product portfolio to work with, a talented employee base and a new leadership team dedicated to implementing our new roadmap."

BlackBerry also announced a joint device development and manufacturing agreement with Foxconn. The initial focus of the partnership will be the development of a consumer smartphone for Indonesia and other fast-growing markets in early 2014, Blackberry said.

"This partnership demonstrates BlackBerry's commitment to the device market for the long-term and our determination to remain the innovation leader in secure end-to-end mobile solutions," said Chen. "Partnering with Foxconn allows BlackBerry to focus on wh at we do best - iconic design, world-class security, software development and enterprise mobility management - while simultaneously addressing fast-growing markets leveraging Foxconn's scale and efficiency that will allow us to compete more effectively."

BlackBerry will own all of its intellectual property and perform product assurance on devices through the Foxconn partnership, as it does currently with all third- party manufacturers.

During a financial conference call, BlackBerry's CEO said he would be "very interested" in trying to replicate some of the company's security and enterprise productivity on rival platforms.

"We'd love to do it," he said when asked about the possibility of expanding the BlackBerry platform to smartphones running Apple's iOS and Google's Android.

"The one great thing about BlackBerry is that we are well known in security and productivity," Chen said.

"I would love to find a way to make our BlackBerry experience [available] on Android and iOS. It's not without difficulties, as you all know, but it's something that we are very interested in trying."




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