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BlackBerry’s stunningly rapid decline is not over. Just eight months ago the company launched a new software platform and phones that it hoped would turn around its business, unveiling the BB10 operating system and Z10 smartphones. The sleek devices and clever platform were center stage at a swanky launch event in New York, one which included an appearance by “brand ambassador” Alicia Keys.
Yet today, the company faces a glut of inventory on unsold Z10s and other devices, and has been forced to write off $934 million on them. On Friday BlackBerry also confirmed a group loss of $965 million for the second quarter ending Aug. 31, or $1.84 a share.
The company’s revenue almost halved, to $1.6 billion, while its cash pile also fell by $500 million to $2.57 billion. It had sold 5.9 million smartphones in the quarter, less than the number of new iPhones Apple AAPL -0.74% sold just last weekend.
Its shares were up 1.1% to $8.04 on Friday afternoon in New York, still well under the approximate $9 a share being offered by Canadian insurance firm Fairfax Financial Fairfax Financial, to take BlackBerry private, suggesting investors are not expecting a higher bid to come on the table.
BlackBerry still has something going for it – a potentially viable services business, $2.6 billion cash and no debt. CEO Thorsten Heins was honest about BlackBerry’s struggles but also spoke about how he hoped to transition the company.
“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,” he said. “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.”
Last week BlackBerry announced that it was shedding 4,500 jobs, or 40% of its staff in a bid to restructure the company. Then on Monday BlackBerry announce it had received a letter of intent from Fairfax Financial Holdings Ltd., headed by billionaire Prem Watsa, to be acquired. Watsa had stepped down from the board of BlackBerry in August in an apparent bid to avoid a conflict of interest as the company put itself on the block. Fairfax is also BlackBerry’s biggest shareholders with a 10% stake.
Fairfax’s purchase of BlackBerry is expected to close on Nov. 4, but that also depends on the financing Watsa is able to round up.
One former BlackBerry shareholder told Forbes of his disappointment at the so-called fire sale to Watsa, suggesting the board should have wound down the company and returned money to shareholders in the form of a dividend.
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