BlackBerry to customers: Shhh. Everything will be okay.

Faith Merino · October 14, 2013 · Short URL:

BlackBerry pens letter to customers telling them there's no reason to panic

Welp, good news, everybody. BlackBerry isn’t doing as soul-crushingly badly as everyone thinks it is. How do I know this? Because BlackBerry said so. Today. In a letter.

Yes, the company is in the process of laying off 40% of its workforce. Yes, it’s just been dropped by T-Mobile’s brick and mortar stores. Yeeeessssss, it’s looking like the Fairfax Financial Holdings deal might not happen after all and BlackBerry will likely end up being purchased and broken apart. But overall, the company’s in a good place and you guys totally shouldn’t worry.

That is more or less the gist of a letter BlackBerry began circulating Monday, in which it explains that while the headlines may look bad, the company is still alive and kicking. How does it figure? Like this:

“We have substantial cash on hand and a balance sheet that is debt free.”

True: BlackBerry has $2.6 billion in cash and investments, but cash plus no debt does not a long-term strategy make.

“We are restructuring with a goal to cut our expenses by 50 percent in order to run a very efficient customer-oriented organization,” the letter goes on to explain.

The company stated as much when it revealed its gruesome second quarter earnings last month. BlackBerry revealed in September that it generated just $1.6 billion in revenue for the quarter. Analysts, meanwhile, were expecting about twice that—or $3.06 billion.

Additionally, while the company generated just $1.6 billion in revenue, it incurred a GAAP net loss of $950 million to $995 million.

The cause of BlackBerry’s horrific second quarter: way, way low Z10 sales. All told, the company sold 5.9 million BlackBerry phones in the second quarter, but it only expects to recognize hardware revenue on 3.7 million phones.

By comparison, the company sold 6.8 million phones and generated $3.1 billion in revenue in Q1 2014.

For a while there, it was looking like Fairfax Financial was going to pony up $4.7 billion for the company, but now there are doubts as to whether Fairfax can actually put the deal together.

Sources told Bloomberg last week that Cisco, Samsung and SAP are interested in different parts of BlackBerry, but none are interested in buying the whole company. Analysts estimate BlackBerry’s messaging system to be worth $3- to $4.5 billion, while its patents could be worth $2- to $3 billion. Its enterprise network could be worth $550 million to $1.1 billion. 

So if the Fairfax deal doesn’t pan out and founders Mike Lazaridis and Douglas Fregin aren’t able to buy the struggling company, there’s a pretty sizable chance that BlackBerry will end up being pieced out. What will happen to the service then? What about people who already own BlackBerries? Is it worth upgrading to a newer BlackBerry 10 device?

To that, BlackBerry responds: Shhhh. Calm down. Everything will be okay.

“We believe in BlackBerry—our people, our technology and our ability to adapt. More importantly, we believe in you. We focus every day on what it takes to make sure that you can take care of business. You trust your BlackBerry to deliver your most important messages, so trust us when we deliver one of our own: You can continue to count on us.”

Okay. But do we file this away with some of BlackBerry’s (or rather CEO Thorsten Heins’s) crazy statements, like BlackBerry isn’t in a death spiral, and tablets will be obsolete in the next five years?  

BlackBerry shares were up 0.87% at the close Monday to $8.14.


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