BlackBerry reports deep loss, revenue drop

CNBC with Reuters
BlackBerry Z30
Simon Dawson | Bloomberg | Getty Images

BlackBerry reported a nearly $1 billion quarterly loss on Friday, days after accepting its largest shareholder's Fairfax Financial, a Canadian insurance company, tentative $4.7 billion bid to take it private.

BlackBerry, which had warned of the results on Sept. 20, said its net loss for the second quarter ended on Aug. 31 was $965 million, or $1.84 a share, while revenue fell 45 percent to $1.57 billion from a year earlier.

The Waterloo, Ontario-based company's steep revenue decline—and mounting losses have revived fears that BlackBerry, once a high-flier and pioneer in the smartphone sector, now faces an ignominious death.

"We are very disappointed with our operational and financial results this quarter and have announced a series of major changes to address the competitive hardware environment and our cost structure," BlackBerry Chief Executive Officer Thorsten Heins said in the earnings statement.

The loss included a pretax noncash charge of about $934 million against inventory and supply commitments for its new Z10 phone.

Excluding items, the quarterly loss was 47 cents a share on revenue of $1.57 billion.

Analysts had expected the company to report a quarterly loss excluding items of 49 cents a share on $1.61 billion in revenue, according to a consensus estimate from Thomson Reuters.

BlackBerry's results come one week after the company delivered its preliminary quarterly earnings, indicating that it would see a second-quarter loss excluding items of 47 cents to 51 cents per share and a decline in revenue to $1.6 billion.

The company also announced plans to slash 4,500 jobs, or above 40 percent of its workforce, as part of a massive restructuring.

"It's in line with the pre-announcement and the pre-announcement was just loaded with negatives—sharp reduction and revenue and inventory write-downs, cash balance shrinking, negative cash from operations and a bleak outlook," said Colin Gillis, technology analyst and director of research at BGC Partners.

"All eyes turn to the Fairfax deal," Gillis said, but "right now the market's skeptical because the stock is trading below the bid price" of $9 a share.

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Reuters contributed to this report.

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