BlackBerry CEO ‘very disappointed’ with earnings


BlackBerry President and CEO Thorsten Heins at a product launch earlier this year. The troubled smartphone maker’s revenue dropped by 45 percent from same period last year. (Andy Rain/EPA)
September 27, 2013

In the face of a dismal earnings report Friday, even BlackBerry chief executive Thorsten Heins struggled to find a silver lining.

The beleaguered smartphone maker reported a loss of $965 million during the second quarter and more than $1 billion during the past two quarters. Its revenue tumbled 45 percent, to $1.6 billion, during the second quarter compared with the same period last year. The company also sold an anemic 3.7 million handsets in the quarter. (Rival Apple recently sold more 9 million of its new iPhones in a weekend.)

“We are very disappointed with our operational and financial results this quarter,” Heins said in a statement.

This week, the company announced a tentative $4.7 billion deal to be acquired by Toronto-based Fairfax Financial Holdings. Citing that deal, which would take the company private, BlackBerry did not hold its customary conference call with analysts to discuss its earnings report. BlackBerry, formerly known as Research in Motion, has said it will consider other suitors.

In the meantime, the company is in a holding pattern. It announced this week that it would slash 4,500 jobs — about 40 percent of the Waterloo, Ontario, company’s staff. And its latest phones, the Z10 and Q10, have not caught on with consumers.

In a statement, BlackBerry said it’s waiting for the phones to be “sold through to end customer,” meaning that they have been shipped to retailers and have been sitting on store shelves.

The Z10 and Q10 were supposed to launch BlackBerry into the modern smartphone world, but the company reported that most of the handsets it sold in its most recent quarter were older devices running its previous BlackBerry 7 system. And more than 1 million of those phones shipped during the previous quarter have also been sitting on retailers’ shelves.

Acknowledging that its strategy for consumers has not worked, the firm has said that it is returning to its roots and will focus on business and government clients, where its reputation for security has been a strong selling point.

That has been particularly true in the District, as The Washington Post reported, though even that market has been shrinking as Capitol Hill offices and even agencies such as the Defense Department have started allowing employees to use phones made by Apple and Android handset makers such as Samsung.

Apple and Samsung have also made efforts to appeal more to enterprise customers by offering security features or programs that allow IT departments to better control devices that companies increasingly allow their employees — rather than systems administrators — to choose.

That has the potential to further erode BlackBerry’s position in the business market, as Apple and Samsung have wider consumer appeal.

Although the overall numbers were painful, Heins said the company sees its services business as a bright spot and asked for patience.

“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,” 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.”

BlackBerry investors were far from blindsided by the dismal numbers, which the company had previewed a week ago. The stock was up $0.08, or 1.01 percent, to close at $8.03.

Hayley Tsukayama covers consumer technology for The Washington Post.
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