Canadian handset maker,
) which plans to release its second quarter 2014 financial
results on Sep 27 recently produced a disappointing preliminary
result for the second quarter of fiscal 2014. As a result the
stock price of the company fell by nearly 17% to $8.73 per share
at the close of the market on Sep 20.
BlackBerry anticipates GAAP net loss of nearly $950 million to
$995 million for the second quarter of 2014 mainly attributable
to written-down unsold devices costing of between $930 million to
$960 million. Moreover, it expects revenue for the upcoming
quarter to be $1.6 billion, down 45% year over year while
smartphones sales are expected to be 3.7 million, down 50% year
Loss per share on a GAAP basis is expected to be around $1.81 to
$1.90 which includes written down cost of the inventories and a
$72 million restructuring expense, while excluding these charges
loss per share is expected to be in between 47 to 51 cents. As
per the Zacks Consensus Estimate revenue and EPS for the period
are expected to be $2,422 million and a loss of 19 cents per
BlackBerry also plans to slash its smartphone portfolio from six
handsets to four devices which includes two entry level phones
and the remainder will be high-end devices. Such a move will help
the company to reduce cannibalism of its own devices and target
both the markets in both developed and emerging nations.
Moreover, the company's decision to trim its staff strength by
nearly 40% will help the company to slash its operating costs by
nearly 50% by the end of the first quarter of 2015.
Earlier, BlackBerry which was the market leader in the smartphone
business, had failed to upgrade its operating platform. It led to
loss of market traction to
) iOS and
) Android operating systems during the past few years, and as a
result the company is incurring huge losses.
Despite launching its new operating platform BB10, the company
has failed to revamp its smartphone business. In the last year,
the company sold nearly 32.5 million smartphones as compared to
Samsung Electronics' 216 million and Apple Inc.'s 136 million
handsets. Both, Samsung and Apple took up 30.3% and 19.1% global
market share respectively, while BlackBerry had a mere 4.6%
market share in 2012.
Such poor performance of the company may force BlackBerry into
either privatization or to sell off its entire business. The
company may also dispose of its popular BlackBerry Messenger
(BBM) service which has 72 million dedicated followers. The
company has already decided to offer its popular BBM service to
Android and iPhone users.
Similar to BlackBerry another mobile phone giant
) has also decided to sell off its struggling handset business to
Microsoft Corp. for $7.2 billion.
Now it will be interesting to see what price bidders are willing
to pay for the Canadian handset maker if it goes on sale. If
Nokia can sell its business for only $7.2 billion even after
listing 30,000 patents and more than 10,000 patented innovations,
then we prefer to remain highly doubtful about the market price
of BlackBerry as the company has only 2,033 patents and $3
billion in cash and marketable securities.
Currently, BlackBerry carries a Zacks Rank #3 (Hold).
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