BlackBerry Hemorrhages Red Ink, Looks to Foxconn for Help
Embattled smartphone maker BlackBerry saw no rest to a weary year, as the company was forced to take a massive $4.4 billion write-down Friday on unsold inventory in its fiscal third quarter, including on the device that it hoped would lead to its salvation.
The news sent Blackberry (BBRY) stock lower by more than 3 percent in premarket trading.
In a sign that BlackBerry isn't yet prepared to give up on the consumer market, it struck a five-year partnership with Foxconn -- the Taiwan-based manufacturer that is the linchpin of Apple's (AAPL) electronics building efforts. According to BlackBerry, Foxconn will help the beleaguered company develop consumer-focused smartphones for Indonesia, as well as "other fast-growing markets" next year.
Toronto-based BlackBerry reported a net loss of $4.4 billion, or $8.37 a share, in the quarter ended Nov. 30. That compares with Wall Street expectations of a quarterly loss excluding items of 44 cents a share on $1.59 billion in revenue, according to a consensus estimate from Thomson Reuters. %VIRTUAL-article-sponsoredlinks%Revenue for the quarter plunged 24 percent from the previous quarter, to $1.2 billion.
BlackBerry is in the midst of a broad reorganization to help it refocus its efforts on enterprise software and security, while helping the company to find a way to profit from the devices bearing its name. BlackBerry touted growth in its enterprise service, as well what it says were more than 40 million new Apple and Samsung smartphone users who migrated to its BlackBerry Messenger application.
"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, BlackBerry's interim CEO and executive chairman. "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."
That mission, however, may be easier said than done. BlackBerry's market share has dwindled into the single digits, and efforts to rebrand itself in the face of ferocious competition have consistently fallen short. The make-or-break launch of the BlackBerry 10 fell flat with consumers, which forced the company to take a massive write-down on the units and lay off about 4,500 people.
In November, the company jettisoned Thorsten Heins from his perch as chief executive, while simultaneously ending a buyout agreement with Fairfax Financial, opting instead for a $1 billion infusion of cash from a group of investors.
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