BlackBerry Fumbles Third-Quarter Results but Announces New Strategy; Shares Rise
Smartphone designer BlackBerry reported third-quarter results this morning.
Revenue was down 24% year over year to $1.2 billion, and non-GAAP earnings amounted to a $0.67 loss per share. Non-GAAP numbers are backing out a $2.7 billion non-cash impairment charge against BlackBerry's long-lived assets, including manufacturing equipment and surplus office space. They also ignore a $1.6 billion writedown of firm supply commitments and unsold inventories, mainly consisting of BlackBerry 10 smartphones.
BlackBerry said it sold just 1.9 million smartphones in the quarter compared to 3.7 million in the previous quarter and said most of them were old BlackBerry 7 devices.
Analysts were looking for a smaller adjusted loss and $1.6 billion in sales. BlackBerry missed both targets, but the stock still opened 3.7% higher today.
Hoping to stabilize the company's financial performance, CEO John Chen is taking BlackBerry in a new direction that focuses more on software and services than on handset sales. "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 said.
To that effect, BlackBerry also announced a partnership with device manufacturing specialist Foxconn. The five-year agreement sees BlackBerry designing low-cost smartphones for Indonesia and other emerging markets, to be manufactured at FoxConn's facilities in Indonesia and Mexico.
-- Material from The Associated Press was used in this report.
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