BlackBerry's Q3 Earnings Report Offers Little Comfort: 10 Reasons Why

 
 
By Don Reisinger  |  Posted 2013-12-24 Email Print this article Print
 
 
 
 
 
 
 
 

Blackberry on Dec. 20 delivered a big lump of coal as an early Christmas gift to investors. The company's financial performance for the 2013 third quarter was downright abysmal as it reported a $4.4 billion loss. Perhaps the only good news coming out of the financials was that BlackBerry still has found a way to keep about $3.2 billion on hand. But BlackBerry can't keep losing billions every quarter if it wants to remain a going concern for long. The company is trying to find its footing by downsizing and restructuring. Still, trouble appears to be mounting for BlackBerry. In the past year, the company has watched its smartphone shipments fall; developers turned their backs on BlackBerry 10; and once-loyal enterprise customers warmed to the idea of letting employees bring their personal iPhones and Android devices into the office. But that doesn't mean that BlackBerry's management is willing to give in just yet. Interim CEO John Chen provided a positive outlook to investors. Whether Chen's restructuring measures will work well enough or fast enough to get the company on a stable foundation remains to be seen. This eWEEK slide show highlights some takeaways from BlackBerry's latest earnings report.

 
 
 
  • BlackBerry's Q3 Earnings Report Offers Little Comfort: 10 Reasons Why

    By Don Reisinger
    BlackBerry's Q3 Earnings Report Offers Little Comfort: 10 Reasons Why
  • Interim CEO: BlackBerry Has Turned the Corner

    John Chen, BlackBerry's interim CEO, said that after taking huge restructuring charges, the company now has a clean balance sheet and enough cash to move forward with a renewed focus on smartphones and mobile services for enterprise customers. He has tried to reassure partners and customers that "we're no longer worried about whether we're going to be around" as a mobile device maker.
    Interim CEO: BlackBerry Has Turned the Corner
  • Smartphone Sales Plummeted

    It's hard to say just how difficult the third quarter must have been for BlackBerry when one considers that it sold 4.3 million smartphones worldwide during the period. However, the big story is that the company was only able to book revenue on 1.9 million BlackBerry smartphones shipped during the period, down from the 3.7 million units delivered in the previous quarter. That's bad news.
    Smartphone Sales Plummeted
  • Revenue Was Down Significantly

    It's hard to not be concerned about BlackBerry when one considers the company generated just $1.2 billion in revenue during the period. During the same quarter last year, BlackBerry's revenue was $2.7 billion. More than half of BlackBerry's business has simply gone up in smoke.
    Revenue Was Down Significantly
  • Losses Mounted

    To make matters worse, BlackBerry posted a massive loss during the third quarter. The company reported that it lost $4.4 billion, compared with a $9 million profit it reported during the same period last year. The loss was due mostly to a write-down of "long-lived assets," but even BlackBerry's gross margin showed a $1.3 billion loss. It's bad news all around.
    Losses Mounted
  • BlackBerry to Shift to Emerging Markets

    A key tenet in BlackBerry's plans for rebirth is the move toward emerging markets. The company's CEO John Chen said he believes BlackBerry can be competitive in markets in which people are just starting to invest in smartphones, due to the company's ability to keep costs low. It should be interesting to see how that pans out.
    BlackBerry to Shift to Emerging Markets
  • BlackBerry Is Outsourcing Device Manufacturing to Foxconn

    BlackBerry also announced with its earnings that it inked a deal with Foxconn that will see the product maker develop and manufacture certain BlackBerry devices over a period of five years. That should free up BlackBerry to focus on product design and not incur the heavy cost of manufacturing.
    BlackBerry Is Outsourcing Device Manufacturing to Foxconn
  • BlackBerry 10 Is a Major Concern

    BlackBerry 10 might be the operating system that Chen and his team want to push, but it's having some trouble attracting new customers. In fact, BlackBerry revealed that out of the 4.3 million smartphones it sold during the third quarter, 3.2 million were running BlackBerry 7. That doesn't bode well for BlackBerry's chances of succeeding in developed countries in 2014.
    BlackBerry 10 Is a Major Concern
  • Software and Services Appear to Be the Future

    Blackberry appears to be focusing heavily on software and services. In fact, the company was quick to point out that 60 percent of its revenue came from services and software. It also believes that BlackBerry Enterprise Server, BlackBerry Messenger and other apps will help grow its bottom line in the coming years.
    Software and Services Appear to Be the Future
  • BlackBerry's Confidence Is High

    Listening to John Chen speak would make anyone believe that BlackBerry actually feels confident in its ability to succeed in the coming years. In a statement on Dec. 20, Chen said that he's proud of what his company has accomplished over the last month and a half and believes that it will deliver "improved financial performance next year."
    BlackBerry's Confidence Is High
  • Investors Reacted Positively to the Quarterly Report

    This talk of losses and falling sales would make anyone assume that investors will continue to bail out of BlackBerry stock, right? Think again. As of Dec. 20, just hours after Blackberry released its earnings, the company's shares were up 14 percent to $7.11. By that measure, at least investors seem buoyed by Chen's assurances and are willing to give Chen and his management team time to work through a successful turnaround.
    Investors Reacted Positively to the Quarterly Report
 
 
 
 
 
Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.
 
 
 
 
 
 

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