The Waterloo, Ontario-based company reported a net loss of $372 million, or 71 cents a share, on revenue of $334 million. A year ago, it reported a profit of $51 million, or 24 cents a share, on revenue of $490 million. Excluding one-time items, the company said it broke even.
BlackBerry has been struggling to reestablish itself in the market since the fall from grace of its BB7-based flagship devices of yore. Their push for a brand new OS, BB10, failed, as did the hardware that they’ve built since. While few can deny the quality of the OS, it was too little too late.
The company has finally bow down to reality, The company confirmed Wednesday it will no longer manufacture its own devices, instead outsourcing it to partners. BlackBerry CEO John Chen says the company will prioritize software development, including apps and security.
“We’ve decided to discontinue our handset hardware development and leverage third-party partners,” Mr. Chen said in a conference call. “We believe that this is the best way to drive profitability in the device business.”
The move was largely anticipated after Chief Executive John Chen signaled he would decide this month on the fate of the iconic BlackBerry phones, which were introduced after the company launched a pioneering two-way data messenger in 1998, and went on to claim more than 50% of the world’s market for smartphones.
But even though BlackBerry’s share of the global smartphone market is now below 1% after years of losing ground to nimbler competitors such as Apple Inc. and Samsung Electronics Co Ltd., the decision to stop making a product that was once so far ahead of its competition shows how badly the company stumbled after its initial success.
Now, by jettisoning handset development, Mr. Chen will face increasing pressure to demonstrate the viability of his plan to grow the struggling company’s software and services business, which grew at a slower-than-expected pace in the second quarter.