WATERLOO, Ont. – BlackBerry (TSX:BB) lost a whopping US$4.4-billion in the third quarter as it reported that its newest smartphones, once touted as the way it would reclaim a competitive position, are hardly selling at all.
The Waterloo, Ont.-based company said more than 74 per cent of the 4.3 million BlackBerry devices that landed in user’s hands during the quarter were its older BlackBerry 7 models, not the new BlackBerry 10 devices.
Those poor sales weighed on BlackBerry’s revenue which was US$1.2 billion, down 56 per cent from a year ago when it didn’t have the new smartphone models on the market. It also was $400 million lower than analyst estimates compiled by Thomson Reuters.
BlackBerry, which is in the midst of significant changes to how it operates, also recorded a number of items related to its restructuring efforts, but the company managed to increase its cash holdings to $3.2 billion at the end of November.
Adjusted losses from continuing operations, which filter out various expenses like restructuring costs, were US$354 million, or 67 cents per share — 23 cents below analyst estimates.
The details come as BlackBerry also announced plans to shift much of it hardware development to Chinese electronics maker Foxconn under a five-year agreement will begin with manufacturing a smartphone for Indonesia early next year.
It’s one of the many changes being made at BlackBerry under the leadership of new chairman and interim CEO John Chen as he tries to reshape the struggling company.
Chen outlined some of his plans Friday in an unusually candid conference call with analysts, where he poked fun at lawyers while acknowleding he has his work cut out for him.
“We admit the fact that in the past maybe we haven’t really lined ourself up as we probably should have done,” he said.
“That has affected our results (and) the market has spoken. We listened and we’re going to listen even more as we go forward.”
In pre-market trade, BlackBerry’s battered initially fell sharply but they rallied after North American markets opened. BlackBerry rose 14 cents to C$6.81 on the Toronto Stock Exchange shortly after it opened while on Nasdaq, where most of BlackBerry (Nasdaq:BBRY) stock trades, the shares were down two cents at US$6.23.
A year ago, BlackBerry had a small profit of US$14 million, or three cents per share, under standard accounting and US$2.7 billion of revenue. Analysts expected BlackBerry adjusted loss would be 44 cents per share and its revenue would be about US$1.6 billion.
Since Chen joined BlackBerry last month, replacing BlackBerry CEO Thorsten Heins, he has started a dramatic overhaul of its executive ranks and begun fresh efforts to turn around the company. He said the changes establish a clear plan to improve its financial performance in the next year.
He said parts of BlackBerry’s business, including its enterprise services for organizations and its messaging products, are in good shape, and that the most immediate challenge is to improve its devices operations.
Chen said the agreement with Foxconn demonstrates BlackBerry’s commitment to making devices over the long term. The handset manufacturer will help develop new models and manage the inventory with operations based in Mexico and Indonesia.
For many people, Foxconn is best known as one of Apple’s main suppliers.
“BlackBerry is an iconic brand with great technology and a loyal international fan base,” said Terry Gou, Foxconn’s founder and chairman in a release.
“We are pleased to be working with BlackBerry as it positions itself for future growth and we look forward to a successful strategic partnership in which Foxconn will jointly develop and manufacture new BlackBerry devices in both Indonesia and Mexico for new and existing markets.”