BlackBerry Teaming Up with Foxconn, Reports $4.4B Loss

BlackBerry Limited said on Friday that it has entered into a five-year strategic partnership with Foxconn that will initially focus on smartphones for Indonesia and other fast-growing markets targeting early 2014. Foxconn will manufacture BlackBerry products at facilities in Indonesia and Mexico. BlackBerry will still own all of its intellectual property (IP) and perform product assurance.

The company revealed that it will focus on market segments where its continuous innovations in secure hardware, software and services remain "critical and integral" to enterprise and government customers. The company also plans to drive adoption of its BlackBerry Messenger service; deliver real-time, reliable and secure messaging through its Network Operations Center (NOC); and grow its enterprise mobility and mobile device management business.

"BlackBerry is an iconic brand with great technology and a loyal international fan base," said Terry Gou, Founder and Chairman, Foxconn. "We are pleased to be working with BlackBerry as it positions itself for future growth, and we look forward to a successful strategic partnership in which Foxconn will jointly develop and manufacture new BlackBerry devices in both Indonesia and Mexico for new and existing markets."

The news arrives after BlackBerry revealed a hefty $4.4 billion GAAP-adjusted loss for fiscal 3Q 2014. The loss includes a non-cash, pre-tax charge against long-lived assets of approximately $2.7 billion, a primarily non-cash, pre-tax charge against inventory and supply commitments of approximately $1.6 billion, and pre-tax restructuring, legal and financial advisory charges of approximately $266 million. The company "recognized" hardware revenue on approximately 1.9 million BlackBerry smartphones compared to approximately 3.7 units sold in the previous quarter.

Most of the units recognized were BlackBerry 7 devices, the company admitted.

"During the quarter, approximately 4.3 million BlackBerry smartphones were sold through to end customers, which included shipments made and recognized prior to the third quarter and which reduced the Company's inventory in channel. Of the BlackBerry smartphones sold through to end customers in the third quarter, approximately 3.2 million were BlackBerry 7 devices," BlackBerry revealed.

On December 2, John Chen, CEO of BlackBerry, said in a letter that BlackBerry is here to stay despite rumors. The company is going through yet another restructuring period, and is refocusing resources. He also assured investors that the BlackBerry infrastructure and solutions are secure.

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  • meltbox360
    Well okay Tom's but if there really was a $4.4 billion loss then they would literally be in debt now and pretty much gone. But instead they have cash on hand and are not in debt and the stock went up by 15%

    Maybe, just maybe, the writes should have done a little research and put a smidgen of thought instead of going with the media norm of bashing BlackBerry. Oh well, can't be bothered to, this headline generates more clicks.
  • meltbox360
    Let me rephrase that as what I said is not true. Its not a $4.4 billion real loss. Therefore not cash burn. But Tom's wrote it as a doom and gloom death article which is why I went explosive. It looks like these "losses" are in fact taking future commitments into account and will end up softening future earnings reports. The company is still fine and has actually decreased costs very substantially to the point that now a turnaround with the terrible sales they have is entirely feasible.
  • meltbox360
    There really needs to be an edit button somewhere. For those that are interested the actual real cash like loss was about $380 million. Also the sell through of phones didn't take much of a hit at all just the channel sell in which means retailers are buying less BB phones but people seem to be buying around not that many less. Seems like this is the point at which BlackBerry has reached financial stability instead of constantly accelerating downward. They aren't in a good spot yet but the real danger has been avoided for the moment.