Blackberry Q2 loss reached $965m

Blackberry’s loss during the second quarter of this year nearly hit one billion dollars ($965 million), after a severe fall in sales.

A week ago, Blackberry investors were warned of an expected Blackberry Q2 loss of approximately one billion dollars when it became clear that its new Z10 model smartphone was not selling well.

Blackberry also announced last week that it was cutting its global workforce by 40% (4,500 jobs) in its attempt to reduce losses.

Sales were so bad during the second quarter that the company had to advise shareholders to expect a “primarily non-cash, pre-tax charge against inventory and supply commitments in the second quarter of approximately $930 million to $960 million, which is primarily attributable to BlackBerry Z10 devices.”

Fairfax Financial, a Canadian financial holding company which currently owns about 10% of Blackberry stocks, led a bid to acquire Blackberry for $4.7 billion. The consortium offered $9 per share. Blackberry said it agreed “in principle” to the proposed acquisition.

President and CEO comment on Blackberry Q2 loss

Thorsten Heins, President and CEO of BlackBerry, said:

“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. 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 BES10, where we now have more than 25,000 commercial and test servers installed to date, up from 19,000 in July 2013.

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.”

About Blackberry

The company started off as Research in Motion Limited in 1984 – it was founded by Mike Lazaridis. Blackberry Limited is based in Waterloo, Canada. It is a telecommunication and wireless equipment firm, best known for developing its brand of smartphones and tablets.

Mike Lazaridis was co-CEO of Blackberry alongside Jim Balsillie until January 2012. Thorsten Heins took over in August 2013.

During much of this millennium, Blackberry held a dominant position in the mobile phone market. Global sales grew from $294 million in 2002 to $19,907 million in 2011.

Although sales of Blackberry communication devices have fallen steeply this year, the number of active Blackberry subscribers has been rising steadily.

Despite launching its new Z10 smartphone with much fanfare, most Blackberry enthusiasts appear to have decided to stay with their earlier models.

Apple Inc., on the other hand, announced on September 23rd, that sales of its new Phone 5s and iPhone 5c models surpassed 9 million in just three days.