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BlackBerry Q4 Sales Sink to Sub-$1B

Ray Le Maistre
3/28/2014
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BlackBerry generated revenues of less than US$1 billion in its fiscal fourth quarter ending March 1 and reported a net loss of $423 million (80 cents per share), the company revealed early Friday.

At $976 million, revenues were down by 18% from the previous quarter but down by a shocking 64% compared with the $2.7 billion in revenues generated during the same fiscal quarter a year earlier.

On average, Wall Street had been expecting fourth-quarter revenues of around $1.1 billion.

BlackBerry reported that during the fourth quarter about 3.4 million smartphones were sold to customers, though this included devices that had been shipped prior to the quarter. Of the devices sold, about 2.3 million were BlackBerry 7 handsets.

The last time BlackBerry posted quarterly revenues of less than $1 billion was for the fiscal fourth quarter of 2007.

For the full fiscal year to March 1, BlackBerry reported revenues of $6.8 billion, down 38% compared with the previous year's $11.1 billion. The net loss for the full year was $5.9 billion.

Despite all of this, the company's share price was on the up in pre-market trading as the company's fourth-quarter adjusted loss (before one-time items), at $42 million, or 8 cents per share, was better than expected, as analysts had been expecting an adjusted loss of 55 cents per share. As a result, BlackBerry's stock edged up by 6.5% to $9.63 in pre-market trading, giving the company a market valuation just shy of $5 billion.

CEO John Chen, who took on the role in November 2013, is attempting to save the company by cutting costs and focusing greater resources on the company's enterprise services, which generated 56% of the company's revenues in the fourth quarter, while hardware (handsets) generated just 37% of the total (and 7% for software and other income).

BlackBerry, like Nokia Corp. (NYSE: NOK), failed to adapt as Android devices, built by companies such as smartphone market leader Samsung Corp. , and Apple Inc. (Nasdaq: AAPL)'s iOS phones cornered the market. (See Asia Strengthens Its Grip on Smartphone Market.)

While BlackBerry currently continues to try to revive its fortunes on its own, Nokia's device business is about to be swallowed by Microsoft Corp. (Nasdaq: MSFT). (See Nokia: It's Really Happening, Euronews: Nokia Handsets Sale Delayed and Euronews: Nokia's Handsets Go Out With a Whimper.)

For more on BlackBerry, see:

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

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Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
4/8/2014 | 6:47:29 PM
Re: Chen: turnaround man?
Me: "The best it can do at this point is to position the company for a takeover. But what does BlackBerry have that another company would want to buy? Patents?"

nasimon: "IMHO BB still has the best secure enterprise push email. So a company like Microsoft, that want to grab a fair share of devices market, can benefit by acquiring BB & strengthening the enterprise device market. Sure BYOD is a trend but many industries like government, banks, defence, security would take a long time to adopt BYOD - if at all."

Good points. That suggests the mobile email business could be spun out as a separate business, licensed to other companies, or both. 

Mobile email is a feature, not a standalone business. It's something that would make BB a more attractive acquisitions target, but not be the foundation to an independent company. 
thebulk
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thebulk,
User Rank: Light Sabre
3/31/2014 | 10:07:36 AM
Re: Chen: turnaround man?
I can not imagine who would want to buy their stock right now, just doesnt seem like it could even be a long shot, just wasting money. 
kq4ym
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kq4ym,
User Rank: Light Sabre
3/31/2014 | 8:55:56 AM
Re: Chen: turnaround man?
With a market value of about five times revenue one wonders why the stock is not in a deep freefall. Especially considering almost a half billion dollar loss, it's going to be pretty iffy if the company can exist on it's current plan which seems to be steadily lookng pretty gloomy. But then again, who can predict the future?
thebulk
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thebulk,
User Rank: Light Sabre
3/31/2014 | 1:39:20 AM
Re: Chen: turnaround man?
@R Clark, I think you are right on the money about BYOD, that is going to be the hardest thing for BB to overcome at this point. But BYOD is not the only thing against them, many companies are moving away from BB all together as it no longer serves their needs. Even my old company which had been die hard BB since the start made the switch to Apple last year just as I was leaving. 
R Clark
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R Clark,
User Rank: Blogger
3/31/2014 | 12:05:01 AM
Re: Chen: turnaround man?
Yep, they're the world's largest contract electronics manufacturer. Estimates vary but has  somewhere between 750k and 1m employees.
nasimson
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nasimson,
User Rank: Light Sabre
3/30/2014 | 11:36:33 PM
Re: Chen: turnaround man?
@ R Clark: Foxconn? Isnt it the same company that manufactures equipment both for Samsung and Apple both? It seems that Foxconn has a monopoly of component manufacturing of smart phones.
R Clark
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R Clark,
User Rank: Blogger
3/30/2014 | 11:07:22 PM
Re: Chen: turnaround man?
Enterprise services accounts for most of their revenue and is their best hope, but they're still up against BYOD. On the upside, most of the losses are coming from hardware, and they've just turned over their manufacturing to Foxconn, so they're not completely sunk.They still have 55m subs, mostly enterprise.

 
thebulk
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thebulk,
User Rank: Light Sabre
3/30/2014 | 10:03:17 PM
Re: Chen: turnaround man?
Their IP is the only thing I can think holds any value for them at this point. It wasnt that long ago when BlackBerry was the go to smartphone, such a distant memory now. 
Kruz
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Kruz,
User Rank: Light Sabre
3/29/2014 | 7:21:14 AM
Re: Chen: turnaround man?
Agreed. But they should have also capitalized on bbm a while ago. It seems just know, bb's ceo has figured out a way to generate revenues out of it.
nasimson
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nasimson,
User Rank: Light Sabre
3/28/2014 | 9:04:02 PM
Re: Chen: turnaround man?
> The best it can do at this point is to position the company for a takeover.
> But what does BlackBerry have that another company would want to buy? Patents?

@ Mitch: You raised a very interesting question: the suitability of a takeover and the appeal for it. IMHO BB still has the best secure enterprise push email. So a company like Microsoft, that want to grab a fair share of devices market, can benefit by acquiring BB & strengthening the enterprise device market. Sure BYOD is a trend but many industries like government, banks, defence, security would take a long time to adopt BYOD - if at all.

My two cents.
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