BlackBerry posts $4.4 bn loss; inks handset deal with Foxconn

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SummaryBlackBerry said it has entered a five-year partnership with Foxconn Technology Co Ltd.

BlackBerry Ltd , after giving up on a plan to sell itself last month, reported a massive $4.4 billion quarterly loss on Friday as sales of its smartphones shriveled and it booked a huge inventory writedown.

Even so, its shares surged 16 per cent to $7.26 in morning trading as investors welcomed a move by the Canadian company that could ease the risk of more writedowns for unsold phones.

BlackBerry said it has entered a five-year partnership with Foxconn Technology Co Ltd to develop and manufacture handsets, starting with a low-end device built for Indonesia and other emerging markets. The deal means that BlackBerry will no longer pay upfront for components for devices produced by Foxconn on its behalf.

Investors viewed the arrangement as an exit from handsets in all but name for BlackBerry, helping push its stock up despite the dismal operating numbers.

“It’s almost like BlackBerry is disposing of its consumer handset business without actually disposing of it,” said Jefferies analyst Peter Misek, who likened the deal to what computer makers Hewlett-Packard Co and Dell have done with laptops.

Chief executive John Chen, who took the helm last month, said he expected the deal to help BlackBerry’s handset business turn cash-flow positive, and for the company as a whole to turn a profit in fiscal 2016.

The firm reported a third-quarter net loss of $4.4 billion, or $8.37 a share, compared with year-earlier net income of $9 million, or 2 cents a share. Excluding the inventory writedowns and impairment charges, the loss was $354 million, or 67 cents a share. Service revenue slipped 13 per cent as fewer people paid to use BlackBerry’s secure network, and the company said that level of decline could be expected to continue.

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