BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) posted huge losses in its financial results for its third quarter fiscal 2014, however the stock price of the company soared by as much as 16% to $7.26 per share in the morning trading as investors welcome its deal with Foxconn Technology Co. Ltd (TPE:2354).
Third Quarter Financial Results
During the quarter, the struggling Canadian smartphone manufacturer reported $4.4 billion losses or $8.37 per diluted share. According to BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB), the losses include non-cash, pre-tax charges against long-lived assets of approximately $2.7 billion, inventory and supply commitments of around $1.6 billion, pre-tax restructuring, legal, and financial charges of about $266 million.
Excluding the impairment charges and inventory write-downs, the losses of the company were $354 million or $0.67 per diluted share.
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) generated a revenue of $1.2 billion compared with its $1.6 billion revenue in the previous quarter. The company sold 4.3 million BlackBerry smartphones during the quarter, which include 3.2 million BlackBerry 7 devices.
The company said it has $3.2 billion total cash, cash equivalents, short-term and long-term investments as of November 30 compared with $2.6 billion last quarter.
In a statement, John Chen, executive chairman and CEO of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) said, “”While our enterprise services, messaging and QNX embedded businesses are already well-positioned … the most immediate challenge for the company is how to transition the devices operations to a more profitable business model.”
“We have accomplished a lot in the past 45 days, but still have significant work ahead of us as we target improved financial performance next year. However, the company is financially strong, has a broad and trusted product portfolio to work with, a talented employee base and a new leadership team dedicated to implementing our new road map,” added Chen.
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) inked a five-year strategic partnership with Foxconn Technology Co. Ltd (TPE:2354) to jointly develop and manufacture certain new BlackBerry devices and manage the inventory associated with those devices. According the Canadian smartphone manufacturer, the initial focus of the partnership is to produce devices for Indonesia and other emerging markets early next year.
Chen said, “Partnering with Foxconn allows BlackBerry to focus on what we do best – iconic design, world-class security, software development and enterprise mobility management – while simultaneously addressing fast-growing markets leveraging Foxconn’s scale and efficiency that will allow us to compete more effectively.”
Commenting on the BlackBerry’s deal with Foxconn, Brian Blair, analyst at Wedge Partners described it as “a sign of hope.” According to him, “This isn’t a slam dunk … but it speaks to new CEO John Chen’s ability to recognize where the opportunity lies and to preserve liquidity by handing off the hardware manufacturing/inventory management to the best in the business. We believe it is this directional shift that is buoying the stock this morning, particularly in light of the weak numbers for the quarter.”