BlackBerry Earnings: Get Your Popcorn Ready for This Disastrous Finale!

by Dan Burrows | September 25, 2013 9:14 am

Not that it matters anymore (except maybe for the morbidly curious), but BlackBerry (BBRY[1]) reports quarterly results Friday — its last before being taken private — and they will be astoundingly awful.

The BlackBerry earnings release will be something of a black swan song for the once-mighty smartphone company. Just remember that even if you own BlackBerry stock, the results don’t matter. Soon you’ll be selling out to Fairfax Financial Holdings, BBRY’s largest shareholder, for 9 bucks a pop. That comes to $4.7 billion for a company that was once worth more than $80 billion.

It’s over … and it ended ugly.

Still, it’s hard to look away from the latest quarterly results. It’s like trying to ignore a train wreck.

Late last week, BlackBerry said it will report a net loss of nearly $1 billion. As a result, BBRY said it would slash 4,500 jobs — and that was before it agreed to be sold to private equity, an industry that isn’t exactly known for ensuring job security at the companies it buys.

The actual numbers for BlackBerry earnings should come in Friday as a fiscal Q2 net loss of $950 million to $995 million, or $1.81 to $1.90 a share, almost all of which comes from pretax inventory charges.

In other words, BBRY found out the hard way that no one wants a BlackBerry anymore. The company was left holding a bag carrying roughly a billion dollars worth of smartphones — and now BBRY will have to eat it.

On an adjusted basis, which is what Wall Street typically looks at, the company said it will report a loss of $250 million to $265 million, or 47 cents to 51 cents a share. Analysts are, on average, more optimistic, projecting a loss of 43 cents, according to data from Thomson Reuters.

That wan optimism isn’t even much for cold comfort, considering that in the year-ago quarter, BlackBerry earnings came to a (much narrower) loss of 27 cents a share. Revenue, meanwhile, is forecast to plunge 45% to $1.6 billion from $2.9 billion in the prior-year period.

The bottom line is there is no bottom line — only a black hole. As of Friday’s results, BlackBerry will have posted losses — even on an adjusted basis — in five of the last six quarters.

More troubling is that even now, with an offer on the table, BBRY shares trade for less than Fairfax’s $9 a share. It seems not even the arbitrageurs are expecting a competing bid.

If you own BBRY, take the money and don’t look back. This is how it ends.

As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.

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