Early this morning, BlackBerry announced the results of its latest quarterly earnings report. If you remember, six months ago there was talk that BlackBerry was looking into the possibility of putting itself up for sale. That changed when Fairfax Financial got involved.
In September, I told you that BlackBerry’s Q2 fiscal 2014 results showed a $965 million loss. Of course this was also the time that potentially the company was up for sale, so that could have had some influence over the situation. The third quarter unfortunately turned out to be much worse. There was a net loss recorded at $4.4 billion. This related to -$0.67 per share on $1.2 billion in revenue.
The experts were estimating that fourth quarter 2014 results would be along the lines of a net loss of $0.56 per share on $1.13 billion in revenue. While it is true that BlackBerry beat these expectations by posting earnings per share of only -$0.08, there was a major revenue loss. Instead of the estimated $1.13 billion, revenue was only $976 million.
It is still believed that at this point BlackBerry is still on solid legs. The reason for this feeling is that although revenue is falling, there has been a lot of house cleaning going on since John Chen took hold of the reins as CEO of BlackBerry. The result is that BlackBerry has been very efficient when it comes to cutting expenses. This is seen as one of the main reasons that the EPS posting was only -$0.08.
John Chen said, “I am very pleased with our progress and execution in fiscal Q4 against the strategy we laid out three months ago. We have significantly streamlined operations, allowing us to reach our expense reduction target one quarter ahead of schedule. BlackBerry is on sounder financial footing today with a path to returning to growth and profitability.”
One problem that I can see becoming an issue is that BlackBerry is eating through the money it has on hand. It did receive an investment of $1 billion from Fairfax Financial and Other Institutional Investors in November 2013 and although it is cutting costs, the money can only last for so long with falling revenue.
The revenue decline could cause some headaches for BlackBerry due to the fact that it represents a 64 percent year-over-year decline from Q4 2013 and a sequential decline of 18 percent from Q3 2014. BlackBerry is also still burning through its cash pile at an unhealthy clip, as its $2.7 billion in cash represents a $500 million decline from the $3.2 billion in cash it had at the end of Q3 2014.
Edited by
Cassandra Tucker
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