BlackBerry sure knows not only how to survive but also thrive. Despite reporting a huge loss in the latest quarterly earnings, the company bolstered investors' confidence by saying it has struck a deal with Foxconn, which will be making its handsets.
BlackBerry reported, Friday, a massive $4.4 billion loss or $8.37 a share, on dwindling smartphone sales and huge inventory write-down for the fisal 2014 third quarter. A year ago, the company had reported net income of $9 million or $0.02 per share for the same period.
The company said it had sold 4.3 million handsets in the quarter ending November 30, of whih older BlackBerry 7 models accounted for more than half that number.
Unsold BlackBerry 10 devices forced the company to write down $1.6 billion of inventory and supply commitments, in addition to the $934 million already written off for unsold stock of BlackBerry Z10 smartphones.
BlackBerry said it also slashed the value of some long-lived assets - mostly licensing agreements inked when the campany was thriving - by $2.7 billion.
The company said its net loss was $354 million or $0.67 a share, excluding inventory writedowns and impairment charges. Analysts had predicted a loss of $0.44 a share.
Revenue also slumped from $2.73 billion to $1.19 billion amid uncertanity over the company's future. Analysts had forecast revenue of $1.6 billion.
However, despite bleak earning results, BlackBerry's shares surged as investors gave thumbs up to the announcement that the company has inked a 5-year deal with the world's largest contract manufacturer, Foxconn, which would see them develop and manufacture low-priced handsets for Indonesia, Mexico, and other emerging markets. The deal is a part of BlackBerry's long-term plan to move its focus from hardware to software. Foxconn founder Terry Gou said his company is looking forward to working with "an iconic brand with great technology and a loyal international fan base," referring to BlackBerry.
BlackBerry CEO John Chen said he expects the deal to add value to the company in the long run and the company as a whole and especially the handset business ought to become profitable by early 2015.
Chen also said he's expecting strong growth in the company's service business, which monitors smartphone traffic on internal networks of corporate and government clients.
"While our enterprise services, messaging and QNX embedded businesses are already well-positioned ... the most immediate challenge for the company is how to transition the devices operations to a more profitable business model," Chen said.
"We have a clean balance sheet, we're strong in cash, we're no longer worried about whether we're going to be around [in the future]. We have some areas to beef up ... but we've taken away the biggest chokehold of the last few years and we're ready to fight back," the chief executive said on the company's earnings call on Friday.
Shares of BlackBerry were up 13.06 percent at $7.07 on the NASDAQ during afternoon trading session on Friday.
