BlackBerry Filing Describes a Global Slide

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OTTAWA -- In a delayed regulatory filing issued on Tuesday evening, the smartphone maker BlackBerry revealed that customers are turning against its products in what had been its one remaining bright spot, the developing world.

"The intense competition impacting the company's financial and operational results that previously affected demand in the United States market is now being experienced globally," the troubled company said, "including in international markets where the company has historically experienced rapid growth."

The company attributed its slowdown in those markets to an increase in inexpensive phones based on Google's Android operating system. But it also cited a factor behind its severe decline in the United States: the relative paucity of desirable software apps for its phones.

The information was contained in a written discussion from BlackBerry's management of the company's financial results for last quarter. Normally, the company's executives would have disclosed its contents in a conference call with analysts shortly after the release of those results, which were released last Friday. That did not happen because BlackBerry canceled its customary conference call, citing a highly conditional, nonbinding bid from its largest shareholder, Fairfax Financial Holdings of Toronto.

Despite the company's reversal in developing markets, Europe, the Middle East and Africa overtook the United States, historically BlackBerry's main market, during the quarter. The company's North American sales were $414 million, or 26 percent of its revenue for the period. The region including Africa brought in $686 million, about 42 percent.

The company on Friday reported a loss of nearly $1 billion for the quarter, much of it coming from a write-down of inventory of the new line of phones using the BlackBerry 10 operating system, which were supposed to be potent competitors against Android phones and Apple's iPhones.

The regulatory filing details the fall of BlackBerry's hardware business. During the quarter, sales of phones declined by $942 million, or 55 percent, compared with the same period a year earlier. Although most of the BlackBerrys sold during the quarter were older models using the BlackBerry 7 system, the company affirmed plans to discontinue them to focus on four versions of the new phones. The BlackBerry Z10, which introduced the new line in January, will be downgraded to become the company's low-priced touch-screen phone, it said.

Because BlackBerry uniquely runs a global network that handles data from all of its older models as well as some BlackBerry 10 phones, the company also has a highly profitable services business. But that segment did not escape decline, falling 27 percent to $724 million. Its performance was slightly improved by $25 million in delayed payments BlackBerry collected from wireless carriers in Venezuela. That money had been blocked by Venezuela's foreign exchange regulator.

While the company has repeatedly boasted about the number of corporations that have downloaded its new corporate server software, it acknowledged in the filing that far fewer of them than expected had decided to purchase the software and related services after testing it.

The filing suggests that BlackBerry will still go ahead with its plans to lay off about 40 percent of its remaining staff, about 4,500 people, despite the Fairfax bid. The company indicated that it expected to post about $400 million in charges related to those layoffs during its current fiscal year, up from a previous estimate of $100 million.

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This article originally appeared in The New York Times.


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