Black(Berry) Friday: Bad Day at Black(Berry) Rock ...
>> BlackBerry to Take Nearly $1 Billion Charge
WSJ Digits
Brian R. Fitzgerald
September 20, 2013
blogs.wsj.com
BlackBerry prereleased earnings Friday, saying it will take a nearly $1 billion pretax charge on unsold Z10 inventory.
Factoring in the charge, the company expects to report a loss of about $950 million to $995 million. It also said it will cut 40% of its workforce, or about 4,500 positions, leaving it with 7,000 full-time global employees.
BlackBerry said it will recognize revenue on about 3.7 million BlackBerry smartphones — but not the latest phones. It will recognize them on older devices. Here’s the line from the press release:
"Most of the units recognized are BlackBerry 7 devices, in part because certain BlackBerry 10 devices that were shipped in the quarter will not be recognized until those devices are sold through to end customers. During the second quarter, approximately 5.9 million BlackBerry smartphones were sold through to end customers, which included shipments made prior to the second quarter and which reduced the Company’s inventory in channel."
BlackBerry said it has total cash and equivalents of about $2.6 billion, and no debt.
The Journal’s Will Connors reported earlier this week that BlackBerry was planning to slash its workforce. The job cuts come as BlackBerry seeks strategic alternatives for its business, including a possible sale. The company is also making its popular BBM messaging service available on iOS and Android in a bid to increase its customer reach. One possibility is that BlackBerry spins off BBM as a separate company or sells the business. ###
>> Decoding BlackBerry’s Grim Press Release
Marcelo Prince
The Wall Street Journal | Digits
September 20, 2013
blogs.wsj.com
BlackBerry issued a press release Friday saying the company expects to report a hefty operating loss of nearly $1 billion in its fiscal second quarter due to an inventory buildup of unsold smartphones. It plans to lay off 4,500 employees. Here are six key takeaways from the news:
1) Customers aren’t buying BlackBerry’s new devices. BlackBerry sold only 3.7 million smartphones in its second quarter, compared with 6.8 million in the first quarter. More surprising than the decline is that most of the phones sold were legacy BlackBerry 7 models. From the press release:
"Most of the units recognized are BlackBerry 7 devices, in part because certain BlackBerry 10 devices that were shipped in the quarter will not be recognized until those devices are sold through to end customers."
2) Unsold BlackBerry phones are piling up at retailers and carriers. BlackBerry is taking a nearly $1 billion charge to write down unsold phones, mostly Z10 touchscreen phones the company unveiled earlier this year but hasn’t been unable to sell.
3) BlackBerry will discount the Z10 to compete as an entry level phone. The company’s future lineup will shrink from six planned phones to four. From the press release:
"The portfolio will focus on enterprise and prosumer-centric targeted devices, including 2 high-end devices and 2 entry-level devices in all-touch and QWERTY models."
4) BlackBerry is giving up on the consumer market. After trying to compete with Apple and others in the consumer market, Heins is quoted in the press release saying the company will instead try to win back its traditional corporate accounts and business users. Are they still there? Here’s his quote in the press release:
“Going forward, we plan to refocus our offering on our end-to-end solution of hardware, software and services for enterprises and the productive, professional end user.”
5) BlackBerry is now a services company. Because of the big miss on smartphone sales, half of BlackBerry’s quarterly revenue will be service revenue. BlackBerry is now predicting total second-quarter revenue of about $1.6 billion, compared with Wall Street’s forecast for $3 billion.
6) The company is slashing costs to survive. Although it has no debt and $2.6 billion in cash, Chief Executive Thorsten Heins is slashing 4,500 jobs, or 40% of its workers, as the board searches for a buyer. ###
- Eric - |
