BlackBerry Posts Huge £2.7bn Loss After Asset Write-Down

Blackberry jam spillage stain © Shutterstock

BlackBerry troubles continue but the company hopes restructure and new partnership with Foxconn can give it a break

BlackBerry has announced a massive loss of $4.4 billion (£2.7bn) during the third quarter of its fiscal 2014, due in no small part to a write-down on the value of some assets as part of the ongoing transformation into a smaller enterprise-focused business.

The struggling Canadian manufacturer’s revenues fell to $1.2 billion (£734m) from the $1.6 billion (£979m) it posted in the second quarter, while sales of smartphones slumped from 3.7 million to 1.9 million. The ongoing failure of BlackBerry 10 to revive its fortunes can be best demonstrated by the fact that most of the handsets it sold were running the aging BlackBerry 7 platform.

Billion dollar losses

Blackberry crumble smartphone © sarsmis ShutterstockAround half of its revenue was generated from services, with hardware accounting for just 40 percent and software and other income adding up to seven percent. Recently-appointed CEO John Chen says its results might look bad, but they have established a “clear roadmap” that will allow it to improve in the coming year.

“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,” he explains. “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.”

BlackBerry is focussing on the enterprise to return the company to profitability, with a particular emphasis on services. It boasts of 30,000 BlackBerry Enterprise Service 10 (BES 10) commercial and test servers and 40 million new iOS and Android users of BlackBerry Messenger (BBM) in the last 60 days, claiming the instant messaging platform is used by 85 percent of BES customers for secure communication.

Foxconn agreement

The company says it will continue to push both BES 10 and BBM in the coming months and expects to further reduce costs in the fourth quarter.

However BlackBerry is pursuing a different strategy in the emerging markets, where BlackBerry handsets are still viewed as a status symbol. BlackBerry has agreed a five year partnership with Foxconn to jointly develop and manufacture devices for Indonesia and other developing nations.

BlackBerry says it will retain all the intellectual property and will ensure the devices meet certain quality standards – as it does with all of its third party partners. But it will continue to develop secure hardware, software and services seen as vital to the enterprise and governments internally.

The company’s share of the smartphone market has contracted dramatically in the last few years, resulting in massive losses and uncertainty. The company put itself up for sale earlier this year, but abandoned this plan in favour of generating $1 billion in fresh investment from predominantly Canadian private firms.

BlackBerry has had a bumpy year! Try our 2013 BlackBerry quiz!