News by Andrew Kameka on Friday December 20, 2013.
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BlackBerry has reported a massive loss of $4.4 billion during the third quarter of its fiscal year 2014. The loses were the result of selling too few BlackBerry 10 devices, which has eroded any chance of profits in recent quarters and forced new CEO John Chen into a five-year plan to right the ship.
Formerly the king of the smartphone industry, BlackBerry has fallen on hard times. In the recent quarter, the company sold only 1.9 million smartphones, down from 3.7 million sold in the previous quarter. More troubling, most of the sold devices run the older BlackBerry 7 OS. The unsold inventory of BlackBerry 10 devices and related charges has led to $2.6 billion in losses.
BlackBerry has announced that it has entered into a new five-year agreement with Foxconn to manufacture smartphones, including a consumer device for Indonesia and other emerging markets. Foxconn has more "scale and efficiency" to manufacture smartphones at a lower cost and rapidly, which would make it easier for BlackBerry's troubled device unit to try to compete in select markets.
Only 40 percent of BlackBerry revenue comes from device sales, with 53 percent coming from services, and the remaining 7 percent from software and other revenue. BlackBerry is changing its management structure in order to "drive greater focus on services and software, while establishing a more efficient business model for the Devices business." In other words, BlackBerry sees that its bread and butter is the enterprise sector and that will get its focus, but the company won't give up on hardware. Instead, it will cut development costs and hope that BlackBerry 10 catches on.source: BlackBerry
Andrew is MobileBurn.com's managing editor. He is based in Miami, Florida.