BlackBerry can't stop bleeding money as smartphone sales continue to plummet

BlackBerry can't stop bleeding money as smartphone sales continue to plummet
On Friday, BlackBerry announced its results for the second quarter of the 2016 financial year, and the numbers are anything but pretty.

In the three-month period ending with August 29 2015, the company brought in revenues of $490 million, down 46.5% compared to the same time period a year ago. BlackBerry reported non-GAAP consolidated losses of $0.13 per share. Note that these are non-standardized measurements, ones that BlackBerry considers to best represent the financial performance of the company. You can compare these numbers with the GAAP measurements by heading over to the source link below.

These numbers fall short of analyst expectations, which estimated losses of $0.09 per share at a revenue of $605 million. BlackBerry shares fell about 7% on Friday, as investors flocked faced with yet another quarter of sub-par financial performance.

BlackBerry had some success with maximizing the revenues brought in by its software division, as CEO John Chen announced the fourth consecutive quarter of double digit growth in software licensing revenue. Unfortunately for BlackBerry, the company's smartphone sales, once the main driver behind revenue and profits, continued to plummet. BlackBerry acknowledged sales of 800,000 smartphones for the time period, down from 2.4 million smartphones sold in the same time period a year ago.

Looking into the future, BlackBerry plans to turn around its smartphone sales with its first Android smartphone ever. Officially confirmed as the BlackBerry Priv, the handset will be released by the end of the year.

Pictures of the handset, previously known as the BlackBerry Venice, have drawn in a lot of interest from both loyal BlackBerry fans as well as from those who've owned BlackBerry handsets in the past but have since migrated to Google's mobile operating system. Despite this initial hype, however, it remains to be seen if the Priv will be enough to turn around the company's financial performance.

What do you guys think? Will the BlackBerry Venice be enough to revitalize the company's smartphone sales, or is this too little, too late?

source: BlackBerry

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54 Comments

1. Mxyzptlk unregistered

And here we go. Of course it's fairly obvious blackberry is burning through cash while Chen will either deny it or refer to next quarter cop out answer.

2. Bm888

Posts: 517; Member since: Jul 06, 2015

but let's hope Bb priv. .gives a turnaround because as rumoured it's really a great device..and hope they up their marketing on it...to accelerate uptake and sales

7. fonelover

Posts: 255; Member since: Mar 19, 2015

Smartphone sales plummet? Do they have any smartphone?

4. Podrick

Posts: 1284; Member since: Aug 19, 2015

Hanging on the cliff for years.

8. Commentator

Posts: 3722; Member since: Aug 16, 2011

Turning a loss of $207 mil from the same three-month period last year into a profit of $68 mil this year surely counts for something, no?

11. meanestgenius

Posts: 21754; Member since: May 28, 2014

It does, but too many just aren't willing to see it that way. They'd rather just troll BlackBerry articles.

29. Mxyzptlk unregistered

Chen: I'll have the answer next quarter.

59. JasonX

Posts: 54; Member since: Feb 11, 2015

I suppose. Last year they had a big push and nothing sold. As a result, they lost a lot of money. This year, they didn't spend nearly as much, and sold even less. They have a profit to show, but they're still not selling hardly anything.

9. meanestgenius

Posts: 21754; Member since: May 28, 2014

It's obvious that the turnaround is taking longer than anticipated, but with cash on hand up 37 million to 3.35 billion, BlackBerry isn't in danger of going the way of Palm. Hopefully, the Priv will be the catalyst that turns things around for their hardware division, or Chen will have BlackBerry exit the hardware business entirely. On a brighter note, software and licensing is up, which is good, considering BlackBerry's transition to primarily a software company.

13. Commentator

Posts: 3722; Member since: Aug 16, 2011

Exactly. The author sees a decrease in unit sales as a negative, but as long as BB transitions their model towards software-first, hardware sales become more irrelevant. It's a shame because financial information (like that provided in the link) is so full of useful, interesting information about a company, and PhoneArena boiled it down to a few narrow paragraphs and a headline devised solely to drive clickthroughs.

16. meanestgenius

Posts: 21754; Member since: May 28, 2014

Absolutely correct. If one goes through the actual financial information as you said(I actually went through all 26 pages of the earnings transcript), you'll see that what you just posted is spot on. Phonearena definitely titled this article for clickbait purposes.

22. Subie

Posts: 2349; Member since: Aug 01, 2015

If they exit the hardware business entirely then who'll use the bb10 OS. Or will they discontinue that as well? I'm really cheering for them to continue not only their handsets but also the OS going forward. It's just nicer seeing 3 or more quality options out there besides IOS and Android.

37. meanestgenius

Posts: 21754; Member since: May 28, 2014

They would more than likely continue to issue updates and further develop BB10 on existing hardware to keep it in use for governments and enterprises. But I agree, I'd love for them to continue pushing BB10. If the Priv sells well and helps turn around the handset division, that's what will probably happen.

14. drdaly

Posts: 78; Member since: Nov 09, 2012

yes i do think that BB Priv can bring the company Back to life.

17. Plutonium239

Posts: 1199; Member since: Mar 17, 2015

I doubt that blackberry will find success with android. Hardly any manufacturer makes significant profit on android. I believe that blackberry's choice to put android on the Blackberry Priv will alienate their primary customers, that being enterprise and government. Blackberry seems to be on an inexorable slide into obscurity fighting to their last to remain relevant. Whether they can remain relevant remains to be seen.

28. meanestgenius

Posts: 21754; Member since: May 28, 2014

In that retrospect, you can say Windows handsets are in the same space as BlackBerry concerning smartphones.

40. Plutonium239

Posts: 1199; Member since: Mar 17, 2015

The problem is Blackberry has abandoned/weakened their stance on security of mobile devices. And Windows Phone has been gaining ground in the enterprise sector and the low end phone strategy did result in wider adoption in 3rd world markets. While the market share % did drop, the total number of devices sold increased YTY. The reason why it dipped was because the smartphone market grew at a much more rapid pace than Windows Phone itself. Marketshare % isn't the whole story.

52. meanestgenius

Posts: 21754; Member since: May 28, 2014

How did BlackBerry abandon/weaken their stance if: 1) They didn't abandon BB10. They have at least two updates coming to the platform next year. If the Priv sells well, we will most likely see more BB10 handsets. 2) BB10 is too important for BlackBerry to get rid of at the moment. NO OTHER OS has garnered the certs necessary to function in deep level governments like BB10 has. 3) Handsets DO NOT tell the whole tale for BlackBerry. It's their BES 12 software/EMM/MDM solutions that give them such dominance in enterprise. They are capable of securing multiple OS's with it, including Windows Phones. It's through this that their stance on mobile devices is strongest.

33. BobbyDigital

Posts: 2124; Member since: May 29, 2014

And yet you keep supporting Windows, which hasn't been relevant in mobile for over a decade. While BlackBerry may or may not be sliding, Windows for mobile has crash and burned. Not even Windows 10 can save it.

41. Plutonium239

Posts: 1199; Member since: Mar 17, 2015

Crashed and burned? Really? The market for Windows Phone has been relatively stable. Where as Blackberry, both in marketshare and number of handsets sold slides from year to year.

49. BobbyDigital

Posts: 2124; Member since: May 29, 2014

Relatively stable at less than 3%. Even if they're at 3, that's no accomplishement. They're literally no threat to anyone and on no one's radar. Guaranteed if those Android patent royalties weren't propping up Windows for mobile, they'd be completely dead in the water. Make no mistake, Windows for Mobile is on serious life support. So you really shouldn't be here talking bad about BlackBerry when your favorite OS isn't faring much better. At least carriers are looking forward to a BlackBerry handset. They literally SHUN Windows handsets.

53. meanestgenius

Posts: 21754; Member since: May 28, 2014

BlackBerry's market share in their primary market (enterprise) is mainly based on them being an EMM/MDM provider. That have not lost ground based on that. No EMM/MDM provider is as large as BlackBerry, and with their BES 12 software, they have been thousands of new customers every quarter. Last quarter alone they gained 2,400 enterprise wins. It's not just about handsets with BlackBerry. As they transition further into primarily a software company, handset sales become more and more irrelevant to them. There software has gone up this quarter again, just like in previous quarters.

54. meanestgenius

Posts: 21754; Member since: May 28, 2014

Bobbydigital is correct. If it were not for those Android patent royalties, Microsoft would have shut Windows down by now. Microsoft is literally taking a loss on every handset sold, to the tune of negative $70 per handset.

69. Plutonium239

Posts: 1199; Member since: Mar 17, 2015

No, Microsoft wouldn't have. When Microsoft believes in something, it will stand behind it, trying out various things to make it work and eventually getting it right. The Surface was a failure until the SP3.

71. meanestgenius

Posts: 21754; Member since: May 28, 2014

That was before Nadella took over. Just look what he's done to the handset division so far. He's drastically reduced it. If Wimdows 10 for Mobile doesn't take off, he will leave the handset division. In that retrospect, Nadella and Chen are alike.

73. Plutonium239

Posts: 1199; Member since: Mar 17, 2015

Actually, you are wrong. Nadella has completely committed to the platform. The only thing he did was kill the strategy of flooding the market with low-end devices and reduced the number of devices being made. They will make one low end device, one mid range, one premium/high end device and one device specifically for enterprise. Where as before, Microsoft/Nokia was making several different low end, mid range and high end devices.

74. meanestgenius

Posts: 21754; Member since: May 28, 2014

Nadella is just like Chen, my friend. He's not married to hardware. He's a software guy like Chen, and he's into the Cloud. Both Microsoft and BlackBerry are in a "make it or break it" situation concerning handsets. Should they fail this time around, they will pull out of the handset business. I hope that's not the case. I want to see both survive, for the sake of CHOICE, innovation, and for a more competitive smartphone market.

75. Plutonium239

Posts: 1199; Member since: Mar 17, 2015

Microsoft is not in a "make it or break it" situation, it makes enough profit from other products to not even feel the losses incurred by the phone division. It's part of Nadella's vision of Microsoft. Microsoft will stay in the phone business, no matter what.

76. meanestgenius

Posts: 21754; Member since: May 28, 2014

If Microsoft didn't "feel" the losses of their smartphone division, then why did they gut it? Nadella got rid of practically everyone from Nokia. He was against Microsoft buying Nokia's handset division from the beginning. Microsoft also has shareholders to answer to. Do you really think that they will idly sit buy and let Microsoft continue to operate their handset division at a loss? And do you really think Nadella himself will continue to allow it? You need to be realistic here. Microsoft will not carry the losses of their handset division forever. The writing is on the wall. Why else would Nadella be making more and more of Microsoft's software available to other mobile platforms? If Windows 10 for Mobile is not successful, Nadella will scale back Windows Phone until he shuts it down. I don't want that to happen, and I hope it doesn't.

77. Plutonium239

Posts: 1199; Member since: Mar 17, 2015

Apparently you haven't paid attention to a word Nadella has said. Positions were eliminated because they were redundant and not needed. They aren't going to flood the market with low end designs anymore

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