), reported highly disappointing financial results for the third
quarter of fiscal 2014. Both the top and the bottom line
significantly lagged the corresponding Zacks Consensus Estimate.
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Following the announcement, Blackberry has decided to enter into
a 5-year agreement with the world's leading developer of
electronic products and components, Foxconn. Such a strategic
decision will help the Canadian device maker to target the
smartphone market of Indonesia and other emerging nations.
Foxconn will supply inventories for the smartphones.
Third Quarter Results in Detail
GAAP loss from continuing operations in the third quarter of
fiscal 2014 was $354 million or 67 cents per share compared with
a profit of $9 million or 3 cents per share in the year-ago
quarter. The adjusted net loss per share of 67 cents was also
significantly wider than the Zacks Consensus Estimate of a loss
of 46 cents per share.
Total revenue in the reported quarter was $1,193 million, down
56.3% year over year. Revenues also missed the Zacks Consensus
Estimate of $1,585 million. Geographically, North America
contributed 28.5% of the total revenue while Europe, the Middle
East and Africa constituted 46% of the total revenue. Similarly,
Latin America and Asia Pacific generated 11.3% and 14.2% of the
total revenue in the third quarter of 2014, respectively.
In the reported quarter, BlackBerry sold 4.3 million smartphones,
out of which 3.2 million were BlackBerry 7. Quarterly operating
loss was $5,025 million compared with an operating loss of $230
million in the year-ago quarter. Such massive operating loss
during the quarter was mainly buoyed by writing down of
long-lived assets valued nearly $2.74 billion.
In the third quarter of fiscal 2014, BlackBerry generated $405
million of cash from operations compared with $2,093 million in
the prior-year quarter. Free cash flow in the reported quarter
was $164 million against $1,768 million in the year-ago quarter.
Cash and marketable securities were $3,062 million compared with
$2,654 million at the end of fiscal 2013. Long-term debt during
the quarter was $994 million versus no debt in the prior-year
BlackBerry currently has a Zacks Rank #3 (Hold).
The company continues to maintain its cost control measures by
slashing operating cost, thereby expecting to generate strong
cash flow in the fourth quarter of 2014.
) iPhone hit the market, BlackBerry and
) have been facing competitive pressure, which has taken a toll
on BlackBerry. The situation further aggravated once
) launched its Android software and several handset manufacturers
adopted the operating system.
Meanwhile, BlackBerry has decided to go private by divesting its
entire stake to a consortium headed by Toronto-based insurance
company Fairfax Financial Holdings Limited for $4.7 billion or $9