BlackBerry Reports Second Quarter Fiscal 2014 Results

By Adam Zeis on 27 Sep 2013 07:04 am EDT
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The results are in. We pretty much knew what to expect already though so no big surprises here. As you know, the regular earnings call as been canceled, but here's how things look for Q2. 

Press Release

WATERLOO, ONTARIO--(Marketwired - Sept. 27, 2013) - BlackBerry (NASDAQ:BBRY)(TSX:BB), a world leader in the mobile communications market, today reported second quarter results for the three months ended August 31, 2013 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).

Q2 Highlights:

  • Revenue for the second quarter of approximately $1.6 billion; company recognizes revenue on approximately 3.7 million smartphones in the second quarter
  • GAAP loss from continuing operations of $965 million, or $1.84 per share diluted; includes a primarily non-cash, pre-tax charge against inventory and supply commitments of approximately $934 million and pre-tax restructuring charges of approximately $72 million
  • Adjusted loss from continuing operations of $248 million, or $0.47 per share diluted; adjusted gross margin of $570 million, or 36%
  • Company sees increasing penetration of BlackBerry Enterprise Service 10 (BES 10) with more than 25,000 commercial and test servers installed to date, up from 19,000 in July 2013
  • Cash and investments balance of $2.6 billion

Q2 Results

Revenue for the second quarter of fiscal 2014 was approximately $1.6 billion, down 49% from $3.1 billion in the previous quarter and down 45% from $2.9 billion in the same quarter of fiscal 2013. The revenue breakdown for the quarter was approximately 49% for hardware, 46% for service and 5% for software and other revenue. During the second quarter the company recognized hardware revenue on approximately 3.7 million BlackBerry smartphones. Most of the units recognized are BlackBerry 7 devices, in part because certain BlackBerry 10 devices that were shipped in the second quarter of fiscal 2014 will not be recognized until those devices are sold through to end customers. During the 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 the channel.

The GAAP loss from continuing operations for the quarter was $965 million, or $1.84 per share diluted, including a primarily non-cash, pre-tax charge against inventory and supply commitments of approximately $934 million (the "Z10 Inventory Charge"), and pre-tax restructuring charges of approximately $72 million related to the Cost Optimization and Resource Efficiency ("CORE") program. This is compared with a GAAP loss from continuing operations of $84 million, or $0.16 per share diluted in the prior quarter and GAAP loss from continuing operations of $229 million, or $0.44 per share diluted, in the same quarter last year.

The adjusted loss from continuing operations for the second quarter was $248 million, or $0.47 per share diluted. The adjusted loss from continuing operations and adjusted diluted loss per share exclude the impact of the Z10 Inventory Charge of approximately $934 million ($666 million after tax) and pre-tax restructuring charges of approximately $72 million ($51 million after tax) related to the CORE program incurred in the second quarter of fiscal 2014. These impacts on GAAP loss from continuing operations and diluted loss per share from continuing operations are summarized in the table below*

The total of cash, cash equivalents, short-term and long-term investments was $2.6 billion as of August 31, 2013, compared to $3.1 billion at the end of the previous quarter. Cash flow used in operations in the second quarter was approximately $136 million. Uses of cash included intangible asset additions of approximately $268 million and capital expenditures of approximately $112 million.

"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," said Thorsten Heins, President and CEO of BlackBerry. "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 BES 10, 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."

*View the full press release here to see the table

Reader comments

BlackBerry Reports Second Quarter Fiscal 2014 Results

186 Comments

Lmao love it. Was gonna type the same thing. CB police will be here shortly.
In the mean time I vote for changing "first" to that username

Posted via CB10 on my Z10 Oreo

Can you please explain to me why people care so much about being first? Did you read the article? Or are you just posting for the sake of posting?

People love hearing themselves speak, I find it mutates into a full on attention whore when it comes to the internet.

I think it's because it's impossible to have fun in the forums anymore. Might as well have it here.

Posted via CB10

shahyaz wrote ''Can you please explain to me why people care so much about being first?''

People who care so much about being first are narcissistic, immature and egotistical with little to nothing to contribute.

how about people stop caring about being first, and even better stop commenting on those people. just a thought

Surprisingly the stock is holding steady right now. Could be because these results were already announced a week ago.

So if they would have not written down the unsold z10s and they shouldnt had, company would had announced a profit and also good earnings of maybe 50 cents WOW but if that would had happened how would company be sold :s SEC should intervene !!!

The whole thing it's insulting. Bad management and a legalized fraud to take the company private.

Also the write off really upset me. Why did they commit to such volumes?!? They thought they'd build an half baked OS with no app and people would flock to hand their cash at them and line up like outside Aplle stores?!?
At least they could have gave 100 millions each to Netflix and Instangram (with that much money they would have built the app within days) and probably the write off would be less than half.

Never have i seen someone write down entire year stock in its second quarter...they had to transfer stock to thrid quarter.. BB10 has a good chance of survival but legalized corruption failing BB.

my friend apple and IOS was the same at their time line...in 8 months we have 135,000 BB 10 apps same as ios did...issue is apps but also marketing and management. firing sales force cant solve anything...fire heins who is getting bloody $55million a year!

that's the most ridiculous comparison ever. that's like me trying to sell you something based off what my competition had many years ago.
People aren't looking at what iOS or Android had in their appstores years ago to make their purchasing decisions now.
Its just a bogus way of saying `well, we got some of the other apps people are using, just not a lot of them'

But reasonable people can't expect a new platform to launch with the same number of apps iOS or Android currently has. And if that's the benchmark then no one will EVER be able to bring a better platform and succeed. The market will stagnate and be ruled by a couple/.

you are correct but in order for folks to make a consideration on apps, BlackBerry had to give them a compelling reason to make a switch and wait on apps. BB10 isn't that. And here we are.

I don't think these arguments are good. If we accept them then you say every company that made an app is foolish. Yes BB10 lacks some big name apps but it also has some big name apps too.

This is why BB shouldn't have wasted all this money and time, which they don't have, making a new OS. They should have continued making BB7 devices and 1 Android phone with they customized (Q10). Then they should have released BB Enterprise which would be a package of apps including BB Balance, hub, bbm, and any other thing they could have added and sold it as a subscription for both iOS and Android. Let the existing platforms work for them vs trying to develop their own or court developers or pay them off. My 2 cents.

Reasonable people also wouldn't buy a Z10 that offers less than what equally-priced competitors have to offer.

It doesn't matter that the Z10's browser is fastest - it's fastest by a meaningless metric that doesn't translate to vastly improved real-world experience. It doesn't matter that BB10 has a Hub - yes it's the best way to manage your communications but it's not enough to pull people away from other ecosystems or lure new people to the BB10 ecosystem.

+1 People aren't interested in a device that does 98% of what they use it for better when it does 2% of what they want it for not as well (or not at all). It is known as loss aversion and every time someone mentions BlackBerry's lack of apps - even if they are apps that would never be used - the psychological response is triggered and people tend to steer clear of the perceived loss. It can be an irrational red-herring but smart marketers know how to use it to their advantage.

Good marketing can over come this. You show what the product does well and attract the people that care about the. Properly presented it can work.

Agreed. The Z10 should have simply been cheaper. No idea how they thought they would "sell like hell" at prices similar to the Competitors.

Microsoft has finally learnt that lesson (the hard way) and has prices it's Surface 2 cheaper than the iPad. Not saying it will sell loads but a (reletively) cheaper tablet withb Office installed is abit of a value proposition.

National Rail Times App for BB10 (Native Q10 and Z10) - http://appworld.blackberry.com/webstore/content/20352963

I agree, but the problem is not the insurmountable App Gap... it's that BlackBerry management didn't do enough to differentiate themselves, and didn't do enough to inform consumers what differentiation there was. They were trying too hard to be just like Android and iOS ecosystems, glibly smiling through gritted teeth "100,000 apps!' even though the big names weren't there.

They went to market as something they're not but something they wanted to be in a year or so, rather than what they WERE: an alternative to the "in and out" paradigm with superior multitasking capabilities. The apps that WERE available, some were pretty good, and the consistency of the user experience is another benefit they have over Android in particular.

When you market an alternative product as 'the same' when it's not, you fail. Object lesson #1. I hope the New BlackBerry doesn't make the same mistakes. App vendors will come to the platform for their own reasons, and BlackBerry should just completely stop trying to get them on board, frankly.

yea but now they can sell the Z10 for next to nothing and grow their marketshare as well as penetration in to enterprise if they offer it as a package with upgrading to BES 10. At least if they grow their marketshare this way that might help with word of mouth marketing and also the app problem we currently have due to mediocre sales of BB10 devices.

That is exactly what they are going to do, making the Q3 numbers look better and especially Q4 where you get holiday shopping and the release of the Q30. If they post a positive in Q4, they market confidence will rise......BlackBerry can do this.

BlackBerry will survive in the Corporate and Government Sectors! My Z10 is so much better than an iphone!

*Z30. With the outstanding new superphones it is up against this quarter (Xperia Z, Nokia 1020, LG G2, Note 3, etc) combined with the lack of consumer confidence, bad press, lack of accessibility, etc... the Z30 will flop much harder than the Z10.

But they are going to market their z10 stock which they have written off through enterprise. I don't think the z30 is going to flop as much as you say......as long as Prem comes forth and states confidence and security in BlackBerry

BlackBerry will survive in the Corporate and Government Sectors! My Z10 is so much better than an iphone!

There is a Big Different my friend!! Quality!! BB10 have lots of Crap apps!! Even the **** MSN from Microsoft is so craaappp!!! The Fart apps from iOS are a lot better developed than BB10 Skype app MSN app etc.. And lots of Apps are cheap Ported apps. I have only 3 useful Apps on my Z10, on my old iPhone 4 I had lots if useful und good developed apps. We don't need million of apps, we need good apps!!!

Posted via Z35

Here is the list of useful apps I have on my Z10 and Q10 that are not part of the BB10 OS and are found in AppWorld:

BeMaps Pro, Gadget Box, Money Plus, SlickTasks, LinkedIn, Search for Wikipedia, Dictionary+, Voice Recorder, CBS Sports, MLB At Bat 13, The Guardian, gNewsReader, Wall Street Journal, Asteroid Blast, Simple Dice, Backgammon Pro V, Flixster, Sound Hound, ARKick, Facebook, Blaq, CB10, Foursquare, Crackle, FastTube, Nobex, Discovery Channel, Search for Amazon.

I use every one of those apps regularly, except Nobex. I realize there are holes in the AppWorld offerings, but we have plenty of apps, we just need to keep working with developers and listening to customers to get the holes filled.

Via CB10 & Z10 or Q10

48 million is shares and if he drives the company in the ground they could be useless and really he only gets that if they fire him basically no?

BlackBerry will survive in the Corporate and Government Sectors! My Z10 is so much better than an iphone!

The difference is for iOS and Android these apps were being written for the first time, so it would take time to build up your app store. Now for other platforms like BB or WP it's about getting the apps ported. The main issue with looking at app counts is how many of those iOS and Android apps are ever downloaded. Saying you have 1 million apps doesn't matter if only 40% have ever been downloaded.

Because some people cry about anything, used to be lack of availability now there is too much...
Or maybe their kool aid was a better brand than ours, and they #BB10believed in BB10?
Either way works in the consumers favor short term (cheaper phones) for those that still value a blackberry.

I will have to remember they don't have 3 or 3.1 billion in cash with no debt, its 2.6 billion now. Can they use some of that cash to bring much needed apps and games to the bb10 platform? (no sideloading or browser link workarounds, simply searchable in BlackBerry World)
Apps like Bank of America, instagram, MyFitness Pal, and popular games like word with friends, candy crush, etc.

if they want they cant put all sideload apps on app world like skype did...take advantage of android apps blackberry...

The only thing they can do with that cash is pay money to the app developers and companies to build a BB10 app. Blackberry does not build Bank of America apps or Instagram. Those companies would have to build it on their own, and the only thing Blackberry can do is provide insentives to have them build apps. According to an article I read yesterday from BB Jam Asia, Alex Saunders indicated they did try this approach, but companies were still reluctant to build bb10 apps. This is going to sound really cheesy, but "If you build it, they will come", however if you don't build it, you loose 1 billion in Q2.

It's a shame the results are as bed as they are - unfortunate. I feel for all those that have worked so hard, and yet this is the result. The Board have to answer for this.

Posted via CB10 on my BlackBerry Q10

They told you this would happen. Earlier in the year Heins said that they would operate at a loss for a couple of quarters while they restructure and that they had to lose before they could return to profitability. WHy are people behaving like this is new news?

Sometimes no news is news. The news that wasn't reported was a write-down of intangibles. The news that wasn't reported was any change in the going concern assumption. That is generally understood to mean that BlackBerry will keep operating for at least the next 12 months with no foreseeable liquidation of assets.

When determining a fair value the number used assumes a scenario other than a liquidation sale (in liquidation accounting values can go out the window). When considering a sale the company's board has a fiduciary duty to get at least fair value or else say 'no'. What this all means is that the $8.4 billion in equity that was just reported now must be considered when determining "fair value" for a sale and it follows that the offer to go private for barely half of that has to be viewed as inadequate at this time.

Either the offer price is raised, the deal collapses, or the board exposes themselves to personal liability for not acting in the interest of the shareholders. It seems the board has painted themselves into a corner. No wonder the conference call was cancelled.

Does anybody think they made a mistake in:

A) launching the Z10 first and then the Q10?
B) by announcing that early that they were looking for strategic alternatives thereby causing panic among potential buyers hence accelerating the downfall.

Posted via CB10

No mistakes there, but a wonderful execution of a nice plan to buy the company for a few peanuts.

I agree. No mistakes. Flawless execution of a well orchestrated plan. I've said this in other posts. Prem, Thor and the c suite execs are the only ones that hedged their bets and will make out like bandits no matter what happens.

Posted via CB10 on my Z10 Oreo

This^
I could have put a kindergarten in thé place of the ceo and I'm pretty sure there would have profits with more 0

Posted via CB10

A) No, the mistake was the fragmented rollout and non-aggressive pricing. The Z10 should have been priced as a mid-tier phone from the beginning.

B) Somewhat, but I'm sure the announcement was brought on from what they were seeing in their internal sale numbers. It's just like that graph Kevin showed us of CB web traffic. So they knew well before they made the announcement that sales had bottomed out on the Z10.

This platform has so much potential, but the company executed so poorly.
I think selling the company was always management's Plan A.
Plan B was BB10.

They should have released them at the same time. I'm stuck with a Z10 but want a q10. The Z10 showed me the world of all touch and a shitty experience into the world of android apps. If it was the Q10 I'd be still stuck on a qwerty keyboard laughing at all touch people.

Now I'm on the move to android soon as possible

Uh, why are you comparing Android apps on Android, vs. Android apps on BB10?!?

Question: how well do BB10 apps work on Android?

The android apps on BB10 gave me a glimpse of the selection in a real app ecosystem. Unfortunately they didn't run good so if you like it gotta go to android

Atleast this one didn't come as a surprise now though, but it still seems very bad. Gonna spark some crazy headlines again today

Posted via CB10

"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,"

- no $h!t. aside from the lack of apps, the company's ridiculous pricing has been their downfall, it's just dissapointing they are so blind to realize the brand isn't as premium as it was, say 5-6 years ago. what the hell, view must have been great looking down from thor's parachute. bastards.

Wrt pricing, I think that they are trying to preserve their enterprise value. But they should discount the phones to accelerate bes revenue.

Posted via CB10 on my Z10

Definitely agree. They should have approached this launch as if the world absolutely turns it's nose up at the mention of the brand. Why? Because outside of fans they do. If they had done that marketing would've been much larger. They would have sat outside of the development teams at these big name apps and said listen. Name the damn price so we can be done with this nonsense and we'll even build the app. We're not leaving until you say yes. And they would have pushed out lower volumes until demand picked up. I'm whatever a prosumer is though so whatever they do, if the product fits my needs still in the future I'll go for it. Hope it works out

Posted via CB10

Many regard BlackBerries as cheap devices based on bad experience with the Curve line. The last thing they want to do to appear to be rolling out another Curve. The price point is intentional to keep the brand premium, knowing that they can still retarget the prosumer market if needed.

If that's how they think, then my god, they are so far up their asses. The last thing they needed to think is to assume price equates to being premium because by everyone's standard nowadays, BlackBerry is sh!t. The better strategy would have been to bring bb10 devices as affordable as possible to the market to recoup market share then worry about pricing afterwards. That didn't happen in big part because of the ridiculous price. Just look at the huge losses the company absorbed bec of the writedown on z10 inventories last week. They never learn.

Hope things can really change. I don't care if BlackBerry comes to be a niche company. In fact, I prefere! I am not changing to any other!

Obviously you don't care about apps because if they become a niche company you won't see many new major titles anymore.

The sell-throughs are new unit of measurement for these reports. I wonder why.

Posted via CB10. Follow Nerds On Site, your technology partners world wide, on BBM Channels: C001227C4

If the conspiracy theorists are right then I'd say they changed now because they knew their "sell through numbers" would be much worse than their "shipment numbers" but if their wrong then i think the change is simply to put in place something their competitors already do.

Posted via CB10 (My amazing Q10)

I'd say the conspiracy moves the other way, the shipped numbers were probably terrible since they'd filled the channels last quarter. This quarter there was probably no demand to ship more phones unto an already full channel, so the only way to save face was report what was sold out of those channels.

Posted via CB10 using my Zed Ten

Since their advertising budget is junk, and they suck at it anyway. They should take those approx. 1.5 million z10's they've already taken a loss on and give them away with an incentive plan. Anything to guarantee they get in consumers hands, and actually have a shot at generating interest. Even a plan of take this z10 for free and we'll pay for your data plan for a year would be worth it in the long run. Would cost about 500 million, but be offset by appworld and future device sales income. The issue isn't that the new system sucks, it's that people won't even look at the device thanks to previous disastrous missteps.

Posted via CB10

Give them to new bes10 installations, get that service revenue growing again.

Posted via CB10 on my Z10

Ya they really need to just take those Z10's and use them as sales tool to push BES10 into every possible corporation and SMB sectors wanting to upgrade or purchase BES10.

I think it's time for BlackBerry to focus on areas that are still profitable i.e. service revenue, until such a time they can establish their place and demand for the consumer markets. That being said, I don't want to see development of the BB10 OS slow down either, as it is critical to continue progressing during the transition so their ready to sell once the company restructuring has completed.

From my Z10 to YOU, BOO-YAH!

Don't worry you'll see all the right moves like that happen when they go private. First they needed to get the company private at a cheap cost

Posted from My all in one beauty Z10

I hope the guys up there know what they are doing with focus on the company, its products and the customers..

Posted via CB10

At least now if they didn't go private they would have a great profit in next quarter and sell off of z10 would look great! They botched it badly thir should pay

Posted via CB10

Appears Prem was part of the team that got Heins three times more compensation if the company was sold. Did Prem's generous offer work to Prem's benefit?

"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," said Thorsten Heins, President and CEO of BlackBerry.

It's Ok Mr Heins. Here's 57 million dollars for trying.

Posted via CB10

Sure numbers are bad, but don't overlook how BB has been bashed over the past years. With almost everything they did, launching new products, restructuring, BB10 - "concerted media" reaction was negative. The recipe seems to be "search for BB on the internet, then take whatever you like out of the pure facts, try hard to interpret it in a negative way and make a big headline out of it".

Given this for me I wonder how BB survived all this bashing - the company and every employee trying to do the very best day after day.

If going private gets them out of media focus I think it's viable option. Also re-focusing on enterprise customers make sense to me; this is the customer base they came from in the first place. Consumer gadgets is a different story, but when it comes to enterprise stuff additional terms like manageability and security come into play and this is where BB excels light years ahead of solutions trying to "add security" to consumer platforms.

Proud to be a "black sheep" - BB still rocks for me in every way

PS: How about top management cutting down its own salary in times like these on a voluntary basis. Would definitely help morale at the company showing that there's no "you and us" but "we".

"PS: How about top management cutting down its own salary in times like these on a voluntary basis. Would definitely help morale at the company showing that there's no "you and us" but "we"."

It worked for the auto companies when they were faltering. The media loves to kick someone when theyre down, unless that someone pays the bills, then that someone can do no wrong. However, the media here in Detroit was for the most part all doom and gloom reporting when Ford, GM and Chrysler had their own respective financial and mis management woes. It was no where as bad as BlackBerry gets, but the outside of the Michigan world loves to rag on Detroit and broadcasts every last bit of negative news they can.

So you are trying to tell me that BlackBerry cannot create a F**king app that can enable users download, convert and sideload apps right on their phones. WTF!

Dude, they can't even get their own app out cross platform. All of you z10 owners are sitting ducks like we playbook owners. Next year BB will be software only concentrating on BES10 only.

Well no, because that would be 100% illegal if it cam from the Google Play Store.

--Q10 and Canadian all the way! Posted via CB10 on 10.2.0.1443. #IChooseBlackBerry10

Depends on the user. Pay for an app on your Android or on a service like bluestacks and then backup and convert the apk to bar and you are in a legal grey area. Steal paid apps for free off the net and install and it is illegal use of the app. Free apps shouldn't be illegal technically but it is best to get the latest apk from an android device or bluestacks.

And how would they know the difference between a bought app and stolen one? The andriod users I know don't even pay for apps themselves. They download from torrent.
It's not our fault the andriod system is too open. Pls. Life is too short.

Sad results. Clearly BB10 phones are not selling in the US and I blame it on management. Zero marketing and promotion. Can't sell what no one knows about.

Posted via CB10

Not selling in the US ? Uh , hate to break it to you but they are not selling Period.
I see more WP devices then Z10's.

I do not see BB as a niche private Company. This is a Money grab with ALL those involved, including Prem Watsa.
I dont trust this guy one bit. I call BS. This is ALL about how to get as much Money as he can from the Demise of the Company.

What they can do is sell those Z's into channels globally and create revenue and profit down the line when they are private....

Posted via CB10

Why cling to a dying brand when they're a well stable and mature brands on the market. Blackberry 10 was doomed from the start. Ppl got tired of the nonsense that this cocky and inept company spew.

Because of the amazing OS.
I don't care about stupid apps, nor company shortcomings. Devices and OS are amazing.

Posted via the stunning Z30!

You might not care, but the million and millions of consumers on IOS and Android phones do. to be honest many of them were BBRY holders.

There is fraud being committed in front of our eyes. It is NOT coincidence that this write down is taking place now, that bbm has not been launched and that the company is on its way to be sold. This is coordinated effort to drive down the stock and sell it as cheap as possible. BBM launch was sabotaged. Just imagine successful lauch with millions of new users. The stock would go up and this would not be good for the takeover efforts.

Posted via CB10

Have you read the BGR article this morning that the board voted to triple Thorsten's compensation last spring? Prem Watsa was on the board at that time.

Also, did you know that Thorsten Heins and the CFO sold shares last Friday before the guidance was released? "The filings showed that Chief Executive Thorsten Heins and Chief Financial Officer Brian Bidulka sold about 51.1 percent of their batches of newly vested shares on September 20, netting C$121,107.68 ($117,600) and C$40,386.79 ($39,200), respectively." This is from a Reuters article but I CrackBerry wont let me post links. Just Google "BlackBerry executives sold newly vested stock on day of warning." It all sounds legit but the optics are bad.

The shares were automatically sold when the shares vested, the same date it occurred last year. It's pretty obvious by now that biased sites like BGR and G&M will not emphasize or even report the finer details to continue with their line of eye grabbing headlines.

The shares sold before the announcement. Trouble is, Heins had the power to hold the announcement until after the share sale. Legal? Sure. Understandable? Maybe. Ethical? Well...

Just sayin'

From the awesome PHYSICAL keyboard of my Q10

I would think BlackBerry would have policies in place to prevent insider trading issues such as this, especially after the stock option back dating scandal the previous CEOs encountered several years ago. I'm bad at being a conspiracy theorist so I cannot comment too much on the subject but, if anything, I believe the shares sold to be circumstantial evidence. Sure, it might've been possible that Heins / BOD could have stopped the shares from being automatically sold or that they could have released the warning earlier but at the end of the day someone will find fault with anything when it comes to insider trading activities. I would hope that the OSC or SEC will do their jobs and disclose any wrong doing swiftly if there is any to be found. I'm not familiar with RSUs so we'll have to rely on what the regulators or other "experts" say on the matter.

FYI

http://www.cantechletter.com/2012/10/insider-selling-at-research-in-motion/

I think the stock sale on Sep 20th was legit. It just looks bad as does buying a jet 2 months before you announce a billion dollar loss and 4,500 layoffs.

Are you trying to say that T.H and CO did not know shares were going to be sold automatically and that they could release the financial mess 1 week before time to drive the stock price down and profit themselves while they are at it?

What were their reasoning behind releasing all this information 1 week before official time, which I don't think has happened in recent history? Even the letter of sale could have been withheld until today as well.

Can someone help explain this excerpt below? I don't get it. So they recognized revenue on 3.7 million, but sell through was 5.9 million in the quarter. Isn't this a change in accounting policy? And shouldn't this cause a retroactive adjustment? You can't compare to prior quarter if the revenue recognition policy is different. Comparing apples to oranges.

Is this some new way in which they are managing their inventory? It states that only "certain" blackberry 10 devices shipped will not be recognized until sold through. So some of the bb10 devices have shipped and not sold through but revenue was recognized? This is very confusing but hopefully Chris or someone else can help clarify.

[quote]"During the second quarter the company recognized hardware revenue on approximately 3.7 million BlackBerry smartphones. Most of the units recognized are BlackBerry 7 devices, in part because certain BlackBerry 10 devices that were shipped in the second quarter of fiscal 2014 will not be recognized until those devices are sold through to end customers. During the 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 the channel."[/quote]

it looks like to other 2.2M phones were counted last quarter as shipped. Previously thyey were counted shipped and sold as the same.

But the phones didn't see or at lest not at the expected price so a correction of some sort is required.

Thus the difference in number and the write down. Still looks vague but better to know actual sales.

Knowing an offer was likely coming and Watsa was on the board until 4 wks ago means they would have to present a more accurate/honest picture this quarter one way or another. Even without the offer if the kept giving the shipped number the market would know it wasn't true.

Have to wonder what the shipped number is though. Not 6M.

We also don't know what the write off is actually for. almost 1B but over how many phones. If BB expected $300/phone, that would be %100 of 3M phones or is it spread over more phones.

I just bought a Z10 for $0 after rebate on a 2yrs contract. Rogers probably counts that as about $300 for the sale. Does BB get anything for that phone. There are a lot of $0 phones available the vmanufacturor must get something for them.

Must get OS10 phone is peoples hands then the Apps will follow.

Changing to sold to customers is more important.

I think it's worse than that... They may have provided us with accountants approved figures last quarter, but they were hiding the truth and they just don't want to have to admit to that just yet...

I am confused about something. If 5.9 million phones were sold through to the end user, why was revenue on only 3.7 acknowledged?

Posted via CB10

Because they channel stuffed those extra phones last quarter, those phones didn't sell until this quarter which ultimately led to $1 Billion write-down which we can see now.

Why doesn't BlackBerry give away those phones to loyal customers rather than writing them off and throwing them away?

Think it would be good to get the phones out there.

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They aren't going to throw them away. They just aren't going to recover all their cost. I'm sure you'll see them on discount somewhere. Just like with Microsoft Surface RT write down. You can buy them in stores but they are $150 cheaper now. That what the write down was for.

HA HA HA, WFT...
"BlackBerry (NASDAQ:BBRY)(TSX:BB), a world leader in the mobile communications market" a few sentences later "GAAP loss from continuing operations of $965 million"... Stop kidding yourself BlackBerry, you're only a world leader in one aspect of the "mobile communications market", broken promises, false expectations, and disappointment after disappointment. Keep Moving.

They are only written off on the balance sheet. Blackberry will still try and get max revenue from them.

This means Fairfax is gonna buy a company with billions of dollars in the bank, and millions in inventory that's bought and paid for.
Refocusing on the enterprise market, which is really BlackBerry's wheelhouse ought to get these handsets in the hands of those who can utilize it's built in functions to the fullest.
I think BlackBerry will find its niche. The original Blackberries were sold to the professional user as well. They became mainstream because people wanted the status of being a BlackBerry owner. If they can get people back into that mindset, then BlackBerry has a fighting chance.
Let's not forget that this OS is still in its infancy. They still have to exorcise some demons out of it, and I'm sure they will.
My gripe is how the employees and investors seem to be getting it in the shorts. They'll take a beating. And the big dogs stand to make out like bandits.

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The sad part is Mr Heins spoke about the Z10 sales, and that they are in line w/ estimates, and they are doing great, increasing production, blah blah blah... now they are writing off all the unsold phones? you mean they ones they increased production for? Looks like Mr. Heins is a liar. but hey, he deserves that $55M (or $36.5M based on the latest stock price)
what a recovery story. Mr. Watsa is our last hope. I'm with BBRY till the end, though. lets hope its not in the near future.

Hmm now I wonder why they can't sell bb10 phones. Specs, camera, apps, and marketing. All of these things amount to all of these failures. Maybe it's good that they aren't spending any money on marketing, nobody wants old shit.

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How the hell can you produce almost 1B in inventory to then just turn around and trash it. That seems like terrible management there. I love my Z10 and I'm disappointed it didn't sell through. I'm also glad they are going private because the media played a big role in this crap. Come on guys get your sh!t together now.

The fiscal year is different from the regular year. The fiscal year ends in the spring.

--Q10 and Canadian all the way! Posted via CB10 on 10.2.0.1443. #IChooseBlackBerry10

I don't agree at all with those who propose to give away BB10s, let me explain why: The lower your price, the more desperate you look and you then spiral into a race to the bottom where profits are razor thin. That's not what you want for BB, which is a quality device with a rock-solid OS.
Having said this, we lost the consumer market a few years ago (I say 3 or 4 at least), due to being extremely slow in responding to Apple's brilliant iPhone. So now in the world of Bring Your Own Device, what Blackberry can offer is first a secure way to send and receive data, and also very secure (non-rootable) phones for the security minded (mostly government officials, defense contractors and criminals). That, as many have pointed out, is a niche market.
The only way to move the Q10 inventory is to actually install Android 4.3 and sell them as Android devices, or even a dual-boot option so you can have both OS (not sure the specs of the phone would allow for us).
Let's hope BB survives as the security phone company of the future.
Cheers to all the BB fans out there!

this is all i have to say about this, I AM DONE; i just can't defend BBRY anymore. i am sorry, i tried and tried to get through the fire and smoke with a dry blanket and im getting burned all the time. I just cant believe the Canadian government will allow this legalized corruption to happen. As i stated before "I am DONE."

bitch, don't come back and say "Hi" again when BBRY gets to the top coz you were broke with bullshit numbers and faded away!

Well that isn't as bad as it could be.
I can't believe they thought the Z10 was going to be such a success that they have tons of unsold inventory. I also can't believe that they can't get the price down and still recover some of that billion dollars. It is a decent phone. It should sell out at some price.

I believe this was the plan from the day heins (for some reason I want to buy a bottle of ketchup now) he was elected ceo. I believe he cooked up a plan to get BBRY private and Mike with the due from Fairfax were in on it. But because the known the system the can basically legalize the corruption they are doing. Its f'ed and to top it off, they knew BBRY were not going to sell a lot of bbry's. So they made a lot so today they can finally say we f'ed up. If only the market could see what BBRY is doing and the market flips it around on bbry's and the stock starts to rise. What's would BBRY do?

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It's definitely an orchestrated robbery by Watsa, Heins, the BOD, and the usual Wall Street bandits. It's a shame this happens under the sun and none of these hypocrites have been criminally charged.

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One positive I see is the increased number of BES10 installations. I know that at my company we waited until mid-August before they were up and running with the new BES10 server. So anyone like me who bought a BB10 device early had to use it as a wifi device, run it as a second phone, or give up access to calendar, email, contacts, etc. As more installations fall into place, hopefully we will see an increase in BB10 sales. There are many people at work who have been holding off until BES10 was ready and/or their contract expired.

Honestly, the reason why it doesnt has any debt is because banks do not want to lend them any. Burning cash at a rate of USD500mil in 1Q is massive. Any idea what BES10 users amount to?

There seems to be a deliberate effort to make this quarter look as bad as humanly possible. Take out the one-time charges and the actual "operating" loss for the quarter is actually less than $60 million. BB10 sales were 3.5-4 times what they were in the previous quarter. They changed their sales reporting, correctly--because it now reflects actual retail sales--but choosing to make the change for THIS quarter makes this one look worse than it actually was. Does anyone else see this? Why would they go out of their way to make this look SOOOO bad?

Didn't BlackBerry say back in Q1 conference call that the reporting was going to change for some things going forward hence the reporting of sell throughs in Q2 versus shipped in previous financials?

The thing is, by the time they issued the Q1 report they would have already had a good sense of what impact this reporting change would make. This bugs me.

From the awesome PHYSICAL keyboard of my Q10

Didn't they say that they were likely to operate a loss for the next few quarters? Just so that I understand, what would you have liked them to have them because of the reporting change? Does GAAP have rules for these type of things?

If they'd changed the sales reporting the quarter before, they would have shown BB10 sales of maybe 800k for Q1. Which was admittedly way worse than the "shipped" claim, but they might have spun it as a slow launch and shown an improvement for this quarter.

Agreed with this line of inquiry...actually would it not make sense (from a certain point of view) for them to do this, so that the next quarter - namely, the one concurrent with the Fairfax deal - looks as good as possible, maybe even posts in the black ?
Also - you guys on here who are so certain Z30 will flop - you are essentially saying the Blackberry management, despite their mistakes, will have learned literally nothing from the Z10 launch and the ensuing months, and will not target the 30 a little better and with lower costs now because of the restructuring. Does someone here have insider information ? No ? Ok then. Take it easy for once.

Fair enough. I get your line of thinking. I'm guessing at the time they were just trying to spin news as positively as it can for the sake of the BB10 lunch but as we all know it did not work. It looks like they may have just recently conceded the PR battle and unfortunately air out their dirty laundry as Chris U mentioned. As far as reporting goes, I wish they would have stuck with how they did Q1 to keep it consistent for the year but then again I'm not sure what the rules are with these things so it is what it is.

Simple solution to the numbers problem.....fire and rehire the marketing team. These numbers just support that change is needed.

This is bad ... myself and many people were really *really* optimistic about BlackBerry's competence on competing on the Consumer Market with BB10 and the NextGen devices. Instead, we get failure after failure, disappointment after disappointment, slowly bleeding to death ... And it sucks because BB10 is a great place for devs to make easy money compared to mega competitive App Market of iOS and Android, BB10 is a breeze!
I'm really down after reading this press release. It looks too bad.

This is brutal. Revenues down 49 percent from last quarter, down 45 percent from same quarter last year. Cash pile depleted by $500,000,000. (Looks a bit more bleak than "$0.5B".)

This isn't about the merits of the hardware or OS. This is about a company that has lost its market almost completely.

Q10 should have been the first phone out followed by the Q5 and then the Z30 and lastly the Z10. I wanted a qwerty keyboard and was willing to wait to get it.

Had they done that and got the bridge right on the Playbook they would have been in much better shape.

I feel BlackBerry was listening to the wrong focus group. Most people still using a phone with a physical keyboard weren't looking for a touch screen they were looking for a better experience. The Q10 was and is the better experience.

If I needed a larger screen for whatever a bridged PlayBook provided that for me. My phone is a communication device. My PlayBook is my gaming device.

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They need to fire the whole marketing departing. Something that should have been done about 2 years ago.

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Why are they just sitting on this pile of cash when they have done such a miserable job marketing the product? They need to invest heavily into making people aware that BB10 is different from BBOS, and that these aren't your bosses or your old work issued BlackBerry devices. Instead they do nothing, which seems to be playing into Prem Watsa's hands quite nicely.

What they could possibly do is bundle some phones at a discount with licences of BES to corporations possibly SMEs. Say "we'll give you 20 Z10s or Q10s if you sign an X year deal for BES subscription (I'm sure BlackBerry have the accountancy geeks inhouse that can do the math to make the sums profitable, I'm just pulling hypothetical sums out of the air in this example).

Something along these lines, SMEs might actually be getting a good deal if BlackBerry offers packages like this.

National Rail Times App for BB10 (Native Q10 and Z10) - http://appworld.blackberry.com/webstore/content/20352963

A look from Eastern Europe: in two months my current subscription is expiring and was planning to upgrade from my Torch 9860 to Z10. Not sure I'll do this. People laugh at me now for having a BB and tell me I should get to my senses and buy an iPhone/Android phone. I was hoping that this quarter's results would help in my decision, but I don't want to end up having a device that no one uses or makes apps for (or, in one year's run, it may not be supported by the company).
In addition:
- BBRY have done a terrible job in addressing the consumers: in my country, BB is still perceived solely as a business phone. Except me, none of my friends/colleagues/relatives owns a BB as a personal phone. BBRY have not managed to market themselves as a retail phone and, in my view, they never will
- from this, people do not get interested in BB. They don't care that a new OS is out, not interested on what it does/can do. For them, BB is just the tool that their boss can use to get a hold of them
- lack of apps is a serious issue: truly, most of my friends iOS/Android users do not use a huge amount of apps. But they can always say "hey, I have all these apps". BB users cannot say that (even if I don't get why I would be proud to have Skype on my mobile device). And, for most of the consumers, this matters. On the other hand, lower specs do not seem to be an issue: haven't seen too many interested in the specs when they buy a phone: most of them go for the brand (and, subsequently, for the price).
- marketing lacks. I haven't seen Vodafone or the local arm of Deutsche Telekom promoting the BB. Orange does something in this direction. Of course, no commercials from BBRY themselves.
- haven't seen almost anyone with a BB10. Two persons with Z10, none with Q10. Hell, I've seen more Nokias with WP lately.
- companies providing their employees with BBs still use BB7 devices. They are still on sale, they do the job they are meant to do and cost less and less. No point in getting to BB10 from this perspective (and, not being a tech guy, I am not sure that this would be possible with BES, etc).
I would hold a bet that this is the situation in most of Central and Eastern Europe. These could be good markets (and I'm sure they are especially for iPhone and Samsung phones). Probably the same in Western Europe.
I would say that BBRY have lost the market in my country (and probably in all of CEE). Their turn towards prosumers will not do them any good in this market (BB10 phones will be, just as OS7 and below, just business phones). I'm not sure how BYOD would work, but if that is what I imagine and escalates, I don't see people buying BB even solely for business use (unless they demand higher security standards).
All in all, if what I described replicates in other European countries (and, as I said, this seems to be the situation), we should have another explanation for those terrible numbers.

All people talk about are apps, 90% of what I do with my phone is communicate, weather it be Facebook, BBM, text, or phone, and when it comes to efficient communication, nobody beats blackberry. The other 10% of the time I have no problem finding apps for what I need. Everybody's negativity is depressing, and unsupportive. Buy a Z30 instead of hoping BlackBerry will change because you buy an android or icrap, and roll up a fatty and relax for God's sake

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You seem like a person who doesnt play game apps, and without a huge variety of apps you'd do nothing on your Blackberry. And you have no problem finding a legit Blackberry Skype app? NOT! And apps are what make a smartphone what it is. I have a Playbook and support it fully. On the same hand since my Playbook was killed prematurely by Blackberry I went out and bought an iPad mini and am very happy with it. And youre saying everyones negativity is depressing? Well Blackberry is a failing company who has given no one anything to be positive about, so most hate on them.

And if your calling iphone ''iCrap'' when they are an extremely secure product, and sold 9 million units in 3 days, vs Blackberrys pathetic 3 million z10 phones since January, you have never used an iPhone and have serious iPad basher issues. Dont make yourself look like an idiot by bashing Apple who is THE world leader.

Blackberry is still popular in Indian films and all the artists carry BB phone. 300 Million people out of 1.2billion have lot of purchasing power and it is equivalent to US population.

Those are impressive numbers but with all due respect, many parts of India are still (technologically speaking) a third world country compared to the US and Canada and is going to be impressed with Blackberry. However to most Americans and Canadians Blackberry is a substandard product with very little apps, and we all know apps are what make a smartphone. Android and IOS are number one with people because they are simply the best,