BlackBerry reports deep loss, 45 per cent revenue drop in Q2

Troubled smartphone maker BlackBerry has reported a loss of $965 million for the second quarter, in line with what it warned when it surprised the market by releasing dismal earnings projections last week and announcing 4,500 layoffs.

The company, assuring of its committed to completing a series of major changes quickly, also posted a 45 per cent drop in revenue for the quarter under review to $1.6 billion.

"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," Thorsten Heins, the chief executive officer, said in a statement.

A year ago, BlackBerry had lost $235 million on revenue of $2.9 billion.

"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," Heins said.

The adjusted loss was $248 million, or 47 cents per share, in the latest quarter. Analysts surveyed by FactSet had expected an adjusted loss of 16 cents per share.

BlackBerry had on Monday announced that Fairfax Financial Holdings, BlackBerry's largest shareholder, is making a tentative $4.7 billion offer to buy the company and is trying to attract other investors.

BlackBerry cancelled its previously scheduled Friday conference call with analysts in light of that overture.

The head of Fairfax Financial Holdings, Prem Watsa, has earlier said he has every intention of completing the acquisition of BlackBerry, despite doubts that the deal will go through.

Fairfax signed a letter of intent that "contemplates" buying BlackBerry for $9 a share.

Watsa said Fairfax won't be contributing more to the bid than the 10 per cent it already owns. The deal is subject to six weeks of due diligence and there is no breakup fee for BlackBerry should Fairfax walk away. The stock has been trading around a dollar less than the $9 bid on fears the deal won't happen.

Analysts say that although BlackBerry's hardware business is not worth much, the company still has a smartphone service business where it manages BlackBerrys and competing smartphones on its network.

The service business brought in 46 per cent of BlackBerry's $1.6 billion in revenue in the quarter. The company also owns valuable patents. BlackBerry is also strong in having total cash and investments of about $2.6 billion, with no debt, though it's burning through that stockpile. In just the past few months, it's spent more than half a billion dollars.