Mobile phone maker BlackBerry has reported a thumping financial loss in its third-quarter results for the three months to the end of November.
Revenue for the quarter weighed in at just $1.2bn, down 56 per cent from the $2.7bn revenues achieved in the same period a year earlier. The revenue breakdown for the quarter was approximately 40 per cent for hardware, 53 per cent for services and 7 per cent for software and other revenue.
The company says that it "recognised" revenue on some 1.9 million BlackBerry smartphones during the quarter, compared to 3.7 million in the prior quarter. Ominously, the company admits that "most of the units recognised were [older] BlackBerry 7 devices".
This follows a massive write-down in the prior quarter on unsold stocks of BlackBerry Z10 devices, the first of the company's new range of smartphones that came out in January. Many operators have also been left with stacks of unsold Z10s, making them reluctant to take stock of subsequently released devices, especially the lower cost Q5 and the most recently launched Z30.
However, the company claims that it is dealing with its large inventory overhang, while also hinting at revenue recognition issues prior to John Chen becoming CEO earlier this month: "During the quarter, approximately 4.3 million BlackBerry smartphones were sold through to end customers, which included shipments made and recognised prior to the third quarter and which reduced the company's inventory in channel."
It continues: "Of the BlackBerry smartphones sold through to end customers in the third quarter, approximately 3.2 million were BlackBerry 7 devices."
Nevertheless, as a result, losses from continuing operations for the quarter piled up at $4.4bn, including a $2.7bn "impairment charge" to cover both unsold stocks, as well as a charge of $1.6bn to cover restructuring. Adjusted losses from continuing operations for the third quarter weighed in at $354m.
In the same quarter a year earlier, the company eked out a $14m profit - amid hope that this year's launches of BlackBerry 10-series (BB10) devices would help sales and profitability to rebound.
However, new BlackBerry CEO John Chen is confident that he can turn the company around. "With the operational and organisational changes we have announced, BlackBerry has established a clear roadmap that will allow it to target a return to improved financial performance in the coming year," said Chen.
"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."
Chen added: "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. However, the Company is financially strong, has a broad and trusted product portfolio to work with, a talented employee base and a new leadership team dedicated to implementing our new roadmap."
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