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BlackBerry Reports Second Quarter Results for Fiscal 2014

BlackBerry Canada

Earlier this month BlackBerry issued a statement warning that their results were gloomy and now they have released their second quarter fiscal 2014 results. Right along the lines of the earlier announcement the results are not exactly what the company needed.  The inventory write off is being reported due to poor Z10 sales:

The GAAP loss from continuing operations for the quarter was $965 million, or $1.84 per share diluted,
including a primarily non-cash, pre-tax charge against inventory and supply commitments of
approximately $934 million (the “Z10 Inventory Charge”), and pre-tax restructuring charges of
approximately $72 million related to the Cost Optimization and Resource Efficiency (“CORE”) program

Though the Z10 probably did not do that well it seems that the Q10 did not do much better, and one thing is that the public really doesn’t either care to hear about BlackBerry, and the company has really done a poor job at getting the news across to consumer. Most people who see me using a Z10 are usually surprised that the device is a BlackBerry. That alone says a lot about the challenges faced by the company. It will be an interesting end of 2013 for the company with the development of entering into a sale agreement with Faifax Financial.  Check out the press release below or the full report can be found at the following links:

Directly at BlackBerry website

Market Wired

September 27, 2013 07:00 ET

BlackBerry Reports Second Quarter Fiscal 2014 Results

WATERLOO, ONTARIO–(Marketwired – Sept. 27, 2013) – BlackBerry (NASDAQ:BBRY)(TSX:BB), a world leader in the mobile communications market, today reported second quarter results for the three months ended August 31, 2013 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).

Q2 Highlights:

  • Revenue for the second quarter of approximately $1.6 billion; company recognizes revenue on approximately 3.7 million smartphones in the second quarter
  • GAAP loss from continuing operations of $965 million, or $1.84 per share diluted; includes a primarily non-cash, pre-tax charge against inventory and supply commitments of approximately $934 million and pre-tax restructuring charges of approximately $72 million
  • Adjusted loss from continuing operations of $248 million, or $0.47 per share diluted; adjusted gross margin of $570 million, or 36%
  • Company sees increasing penetration of BlackBerry Enterprise Service 10 (BES 10) with more than 25,000 commercial and test servers installed to date, up from 19,000 in July 2013
  • Cash and investments balance of $2.6 billion

Q2 Results

Revenue for the second quarter of fiscal 2014 was approximately $1.6 billion, down 49% from $3.1 billion in the previous quarter and down 45% from $2.9 billion in the same quarter of fiscal 2013. The revenue breakdown for the quarter was approximately 49% for hardware, 46% for service and 5% for software and other revenue. During the second quarter the company recognized hardware revenue on approximately 3.7 million BlackBerry smartphones. Most of the units recognized are BlackBerry 7 devices, 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. During the quarter, approximately 5.9 million BlackBerry smartphones were sold through to end customers, which included shipments made prior to the second quarter and which reduced the Company’s inventory in the channel.

The GAAP loss from continuing operations for the quarter was $965 million, or $1.84 per share diluted, including a primarily non-cash, pre-tax charge against inventory and supply commitments of approximately $934 million (the "Z10 Inventory Charge"), and pre-tax restructuring charges of approximately $72 million related to the Cost Optimization and Resource Efficiency ("CORE") program. This is compared with a GAAP loss from continuing operations of $84 million, or $0.16 per share diluted in the prior quarter and GAAP loss from continuing operations of $229 million, or $0.44 per share diluted, in the same quarter last year.

The adjusted loss from continuing operations for the second quarter was $248 million, or $0.47 per share diluted. The adjusted loss from continuing operations and adjusted diluted loss per share exclude the impact of the Z10 Inventory Charge of approximately $934 million ($666 million after tax) and pre-tax restructuring charges of approximately $72 million ($51 million after tax) related to the CORE program incurred in the second quarter of fiscal 2014. These impacts on GAAP loss from continuing operations and diluted loss per share from continuing operations are summarized in the table below.

The total of cash, cash equivalents, short-term and long-term investments was $2.6 billion as of August 31, 2013, compared to $3.1 billion at the end of the previous quarter. Cash flow used in operations in the second quarter was approximately $136 million. Uses of cash included intangible asset additions of approximately $268 million and capital expenditures of approximately $112 million.

"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," said Thorsten Heins, President and CEO of BlackBerry. "While our company goes through the necessary changes to create the best business model for our hardware business, we continue to see confidence from our customers through the increasing penetration of BES 10, where we now have more than 25,000 commercial and test servers installed to date, up from 19,000 in July 2013. We understand how some of the activities we are going through create uncertainty, but we remain a financially strong company with $2.6 billion in cash and no debt. We are focused on our targeted markets, and are committed to completing our transition quickly in order to establish a more focused and efficient company."

5 total comments on this postSubmit your comment!
  1. This is all i have to say about this, I AM DONE; i just can’t defend BBRY anymore. i am sorry, i tried and tried to get through the fire and smoke with a dry blanket and im getting burned all the time. I just cant believe the Canadian government will allow this legalized corruption to happen. As i stated before “I am DONE.”

    I believe this was the plan from the day heins (for some reason I want to buy a bottle of ketchup now) he was elected ceo. I believe he cooked up a plan to get BBRY private and Mike with the due from Fairfax were in on it. But because the known the system the can basically legalize the corruption they are doing. Its f’ed and to top it off, they knew BBRY were not going to sell a lot of bbry’s. So they made a lot so today they can finally say we f’ed up. If only the market could see what BBRY is doing and the market flips it around on bbry’s and the stock starts to rise. What’s would BBRY do?

  2. It’s sad because I’ve come to love the new ‘Berry. I really think if they could have gotten their **** together and gotten some of the top devs on board they could have done well.

  3. They should start to almost give these unsold Z10 or Q10s away so that more people have them in there hands.

  4. Blackberry Q2 2014 as expected – Disappointing @ http://stks.co/gmyd

  5. If iPhones can sell millions, BlackBerry should sell billions. This just proves the concept of marketing a bad product well vs bad marketing a good product.
    The QNX has so much potential that 10.2 is barely breaking through what it’s capable of.
    One thing I noticed is their ads are too vague to know what it’s about and what the product can do along with software that can be loaded on it (ie: skype, net talk, viber, tango…etc)

    Just a side note, since the DOD went with BlackBerry again, you bet they know something about BlackBerry that none of us knows.

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