While Waterloo, Ont.-based BlackBerry reported a $965 million GAAP loss from continuing operations on Friday, president and CEO Thorsten Heins insisted the company is still financially strong.
The company released results for the second quarter of its fiscal 2014 that were largely in line with what it previewed a week earlier. The preview was followed days later by the announcement of a letter of intent between BlackBerry and Fairfax Financial Holdings that would take the company private in a deal worth $4.7 billion.
In its earnings release, Blackberry reported the $965 million loss on revenue of appx. $1.6 billion. Revenue was down 45 per cent from the $2.9 billion realized in the same quarter a year ago, and down 49 per cent from the $3.1 billion in revenue recorded in Q1. About 49 per cent of the revenue came from hardware, 46 per cent from services and five per cent from software and other revenue.
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The loss includes a $934 million inventory write-down, primarily of excess Z10 smartphone inventory. Without the write-down and restructuring charges relating to the layoff of 4,500 employees announced last week, the adjusted loss from continuing operations for the second quarter was $248 million.
BlackBerry has $2.6 billion in cash and investments as of Aug. 31, down from $3.1 billion at the end of the previous quarter.
As announced, Thursday, due to the Fairfax letter of intent BlackBerry cancelled its earnings conference call for financial analysts. In a statement Friday, Heins acknowledged the Q2 results as disappointing, and pointed to the layoffs and refocus from the consumer to the prosumer and enterprise market and steps being taken to address the situation.
“While our company goes through the necessary changes to create the best business model for our hardware business, we continue to see confidence from our customers through the increasing penetration of BES 10, where we now have more than 25,000 commercial and test servers installed to date, up from 19,000 in July 2013,” said Heins. “We understand how some of the activities we are going through create uncertainty, but we remain a financially strong company with $2.6 billion in cash and no debt. We are focused on our targeted markets, and are committed to completing our transition quickly in order to establish a more focused and efficient company.”