By Alexandra Burlacu | Sep 27, 2013 10:43 AM EDT
BlackBerry has just reported a whopping $935 million hit it took in the second quarter due entirely to a "Z10 Inventory Charge," as the company explains.
It's no secret that BlackBerry has been struggling for a good while to remain competitive in an increasingly fierce smartphone market. Once at the top, the company lost significant ground to rivals such as iOS and Android and has been trying for a long time to stay afloat.
The new BlackBerry 10 (BB10) operating system was widely seen as a last change for the company to keep its head above the water. Several delays, however, did not help things very much and when BB10 finally launched, it wasn't exactly the resonating success the company likely hoped for.
The BlackBerry Z10 was the first smartphone to launch on the new BB10 OS and is was also the first handset from BlackBerry to ditch the iconic QWERTY keyboard for an all-touch display. While the OS itself got plenty of good reviews and the Z10 was not a bad smartphone, it failed to attract many consumers.
According to BlackBerry, the Z10 s responsible for the $935 million hit it took in the second quarter. The "Z10 Inventory Charge" the company mentions means a loss stemming from a stock of flagship devices that ultimately failed to sell. For the sale of comparison, BlackBerry's current situation with the Z10 is similar to what Microsoft experienced with its ill-fated Surface RT tablet.
The $935 million due to that "inventory charge," combined with a further loss due to corporate restructuring, finally resulted in a GAAP loss of $965 million for BlackBerry.
It's difficult to assess how many BB10 handsets - the Z10 and Q10 - BlackBerry managed to sell during the quarter, but the company did admit that "most" of the 3.7 million units sold during that period were actually older BlackBerry 7 devices.
BlackBerry CEO Thorsten Heins said he is "very disappointed" with the results, but assures that his company did see growth in enterprise servers (BES 10) customers.
"We are very disappointed with our operational and financial results this quarter and have announced a series of major changes to address the competitive hardware environment and our cost structure," said Thorsten Heins, President and CEO of BlackBerry, in the press release. "While our company goes through the necessary changes to create the best business model for our hardware business, we continue to see confidence from our customers through the increasing penetration of BES 10, where we now have more than 25,000 commercial and test servers installed to date, up from 19,000 in July 2013. We understand how some of the activities we are going through create uncertainty, but we remain a financially strong company with $2.6 billion in cash and no debt. We are focused on our targeted markets, and are committed to completing our transition quickly in order to establish a more focused and efficient company."
BlackBerry has also recently unveiled its latest smartphone, the BlackBerry Z30, proving that it is not yet ready to give up on this business. It remains to be seen, however, whether the new Z30 will manage to become successful or it would just follow the same downward spiral as the Z10.
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