BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) has indicated that it might get a $500 million tax refund by the end of 2013, which was previously expected in 2015. In a bid to recover their money to fund the turnaround, BlackBerry requested that Canadian government speed up the process of refunding the money, says a report from Forbes.
BlackBerry’s losses work to its advantage
Though BlackBerry has been posting losses for quite some time now, it seems the losses will benefit the company by providing it with cash via a tax refund at a time when it desperately needs some. Similar to the U.S. government, Canada also lets companies carry forward losses forward and backwards, which means that losses from one year can be adjusted against profit from previous years.
Loss making company
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) posted losses for the past five out of seven quarters, and losses totaled $646 million in the last fiscal. The company primarily suffered due to its misstep of launching the touchscreen Z10 as the first device on the BlackBerry 10 operating system to compete with Apple’s iPhone. BlackBerry, in its quest to stand up to the iPhone, ignored its loyal customers who loved BlackBerry for its classic QWERTY keyboards, and as a result Z10 could hardly garner any sales number.
The company committed another grave mistake when it delayed the launch of the second phone Q10 by almost 10 months after launching Z10. Books of the company showed $1 billion write-down on unsold inventory of Z10. For the last quarter, the smartphone maker posted a net loss of $965 million.
BlackBerry needs cash to fund turnaround
Earlier this month, the intended and much-hyped Fairfax Financial’s $4.7 billion deal for acquiring BlackBerry fizzled out. BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) hence stated that it will run on its own. However, the Prem Watsa-led company is injecting $1 billion in cash to support the Canadian firm.
The company is in dire need of cash, at present, especially when the new interim chief executive officer John Chen is looking forward to rolling out his next plan.
“I’m doing this for the long term. I’m going to rebuild this company,” said Chen, adding that the turnaround of BlackBerry will take six months and believed that the company has enough ingredients to build a long term sustainable business. “I’ve done this before and seen the same movie before,” he said.