BlackBerry cancels device launches, rising inventory costs hurt

Dec 25 2013, 19:00 IST
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Mounting inventory has cost BlackBerry about $1.6 billion in the third quarter and has forced the Canadian handset maker to cancel the launch of two new devices. Reuters Mounting inventory has cost BlackBerry about $1.6 billion in the third quarter and has forced the Canadian handset maker to cancel the launch of two new devices. Reuters
SummaryBlackBerry said the pile up was mainly on account of unsold BlackBerry 10 devices.

Mounting inventory has cost BlackBerry about $1.6 billion in the third quarter and has forced the Canadian handset maker to cancel the launch of two new devices.

BlackBerry said the pile up was mainly on account of unsold BlackBerry 10 devices, which was launched earlier this year with much fanfare.

During the third quarter, the company registered hardware sales of 1.9 million BlackBerry smartphones compared to about 3.7 million BlackBerry smartphones in the previous quarter.

Most of the units recognised were BlackBerry 7 devices.

"During the third quarter of fiscal 2014, the company recorded a primarily non-cash, pre-tax charge against inventory and supply commitments of approximately USD 1.6 billion, or USD 1.3 billion after tax, which is primarily attributable to BlackBerry 10 devices," the company said in a filing.

During the second quarter of fiscal 2014, BlackBerry recorded the Z10 inventory charge of about USD 934 million, which included a write-down of inventory of approximately USD 627 million and supply commitments of approximately USD 307 million.

BlackBerry said it had shipped devices to its carrier and distributor partners to support new and continuing product launches and meet expected levels of end customer demand in the third quarter.

"However, the sell-through levels for BlackBerry 10 smartphones decreased during the second quarter of fiscal 2014 due to the maturing smartphone market and very intense competition," it said.

Additionally, delays in the launch of certain functionality of the BES 10 platform and alternative competitor products in the market have resulted in a slower than anticipated rate of adoption of the BES 10 platform by enterprise customers, it added.

"The company also made the decision to cancel plans to launch two devices to mitigate the identified inventory risk," it said.

BlackBerry has also cancelled its BlackBerry Live event, which has already been hosted 12 times, for 2014.

"BlackBerry events have always been purpose-driven, designed to help get your hands on new products, get familiar with our services, to learn about our future plans and roadmaps, and to demonstrate the powerful capabilities of BlackBerry platforms," it said.

"We've taken a look at how to best meet our goals with BlackBerry events, and today we're announcing that we will not be hosting a BlackBerry Live conference in 2014," it said.

Instead, BlackBerry will engage a line-up of smaller, targeted events taking place all around the world over the next 12 months.

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