BlackBerry Teams With Foxconn, Announces $4.4B Loss

By Michelle Maisto  |  Posted 2013-12-20 Print this article Print

BlackBerry brought in revenue of $1.2 billion during the quarter, which was down 24 percent from the previous quarter and 56 percent from a year ago.

The company also shared its new organizational structure, which will focus on enterprise services (more than 30,000 companies have agreed to test BES10, which is good news though not yet any revenue); messaging (BlackBerry added 40 million new iOS or Android users to BBM in the last 60 days, bringing its total to 80 million); QNX, which will soon unveil new technologies for automotive and cloud services; and of course, devices.

"This is an excellent [approach] as it recognizes the three growth areas that are critical to the company's turnaround and offsetting the declines in the core devices business," Jan Dawson, chief analyst with Jackdaw Research, wrote in a Dec. 20 blog post.

However, Dawson continued, "the company stopped short of reporting revenues in any of these new segments, which is a sign of just how small the revenues there are today. BlackBerry needs to grow these three revenue streams enormously in the near future to make up for the loss in revenues in the handset business."

Will Americans Buy BlackBerry Handsets Again?

BlackBerry has sensibly stopped trying to lure consumers away from competing devices and steadied its focus on enterprise users. But with consumers increasingly using their personal devices as work devices (a trend BlackBerry understands, as BB10 now offers device management support for BlackBerry, iOS and Android devices), getting even enterprise users in developed markets to buy BlackBerry handsets will be a tremendous feat.

Nobody expected pretty numbers from the BlackBerry earnings call, "but these results remind me of the old saying: Beauty is only skin deep, but ugly goes all the way through," Bill Menezes, a principal research analyst with Gartner, told eWEEK, suggesting that BlackBerry's problem runs to the company's core.

That the majority of sales were BlackBerry 7 devices underscores that people continue to ignore the fact that BlackBerry has a handset consideration, and will in the coming years, said Menezes.

Further, with BlackBerry 7 development coming to a close in the coming years, "The company has yet to provide how—given this latest sign that BB10 handsets have failed in the market—it plans to sustain the handset business post-BB7," Menezes continued.

"The Foxconn partnership provides one sign—low-end devices for emerging markets—but that doesn't address the still-huge embedded BlackBerry global base that increasingly will be migrating off the platform. Not good for the company's financials going forward."

According to Gold, working in BlackBerry's favor is the fact that loyalty tends to be greater in emerging markets and people tend to stick with BlackBerry for its secure (and private—users can BBM without using their names) messaging.

"Frankly, BlackBerry has done a poor job over the past couple of years of marketing their products and telling users why they should look at BlackBerry," Gold told eWEEK. "But once you lose a consumer to another device, it's very hard to get them back. That is BlackBerry's challenge."

Follow Michelle Maisto on Twitter.


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