BlackBerry Z10, Q10 'Still Not Getting Traction'

By Craig Galbraith Comments

A new deal with one of it's archrival's manufacturers helped BlackBerry stock jump 15 percent on Friday.

The once-great smartphone producer announced a five-year partnership with Foxconn of Taiwan, which is best known for working with Apple on the iPhone. The new contract calls for Foxconn to manufacture phones for Indonesia and other parts of the world where BlackBerry devices remain strong. That was the good news.

The bad news?: The handset maker reported a loss of US $4.4 billion in its third quarter. Revenue was less than half of what BlackBerry reported in the same quarter a year ago. The company is still struggling mightily in the most potentially lucrative markets – North America and Western Europe.

“All but US$350 million of the US$4.4 million loss was identified separately by the company as extraordinary items, write offs of inventory and other assets, which is a part of the normal purge of perhaps dubious assets when there is a changing of the guard. And in this case [former CEO] Thorsten Heins will take the blame. So the operating loss was really US$350 million — bad but not as dramatic as the headlines," noted Yankee Group senior VP of research Wally Swain, commenting specifically on a USA Today article. "It is still a loss and much more worrisome were revenues being down 26 percent sequentially and 56 percent year over year. Furthermore, 3.2 million of the 4.3 million devices sold through to end customers in the quarter were BlackBerry 7 devices, which shows that BB10 is still not getting traction."

The losses are one reason that BlackBerry has decided on a corporate reorganization. Its devices unit will now be separate from the enterprise software and QNX divisions, once again raising the question if the company is ripe for a takeover.

" ... what will happen to the healthier non-devices parts of the business: Will a new BlackBerry rise from the ashes or will the now-more-easily appreciated divisions be sold off?" Swain queried.

BlackBerry appeared to be on the verge of being sold earlier this year to Fairfax Financial, its largest shareholder; instead, the investment firm decided to invest $1 billion in the company.

Follow senior online managing editor @Craig_Galbraith on Twitter.

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