BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) announced steep second quarter losses on Friday, in line with the company’s warnings. The struggling Canadian company reported a net loss of $965 million or $1.84 per share on revenues of $1.6 billion for the quarter ending August 31. The disappointing result comes at a time when its largest shareholder Prem Watsa is planning to take the company private.
BlackBerry CEO boasts of the company’s cash position
Last year, the company had reported $2.9 billion in sales and $229 million or 44 cents in losses in the same period. That means sales tanked about 44% within a year. Adjusted net loss for the latest quarter stood at $248 million or 47 cents per share. Analysts polled by Thompson Reuters were expecting $3 billion in revenues and 49 cents in losses. Last week, the company also announced to eliminate 4,500 jobs, or almost one-third of its total workforce.
Most of the losses for the quarter were due to $934 million inventory write-down related to the unsold BlackBerry Z10 smartphones. The company was relying on Z10 to revive its fortunes. The large write-down confirmed that the Waterloo, Canada-based company’s turnaround plan failed miserably. BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) also look $72 million in restructuring charges.
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) CEO Thorsten Heins said in a statement that the company will pull back its consumer operations. The company will now focus on corporate customers and government organizations. Mr Heins said he was disappointed by the company’s poor performance. However, despite the company’s heavy losses, Thorsten Heins boasted about its cash pile. He said BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) still has $2.6 billion in cash with zero debt. Mr. Heins said he is fully committed to complete BlackBerry’s transition into a more efficient and focused company.
Uncertainty over BlackBerry’s potential deal
On Monday, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) announced a tentative deal with its largest shareholder Prem Watsa. Mr. Watsa’s FairFax Financial Holdings owns 10% stake in the smartphone maker. He proposed to take the company private by offering $9 per share. His offer values BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) at $4.7 billion.
Prem Watsa said he will complete the due diligence by November 4. Analysts are skeptical if Watsa will finally acquire the company. He hasn’t disclosed much about how he will finance the deal. Under the terms of their agreement, if Prem Watsa decided not to go ahead with the deal, he will pay nothing. But if BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) accepts another offer before November 4, it will have to shell out $157 million to pay Watsa.
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) canceled its conference call with analysts, citing the tentative agreement with Prem Watsa.
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) shares soared 1.35% to $8.06 at 10:28 AM EDT.