BlackBerry confirms abysmal Q2 results

September 27, 2013 08:28 AM ETIDG News Service - BlackBerry confirmed on Friday its $965 million net operating loss in the second quarter, following low interest in the Z10 smartphone.

Revenue for the company's second quarter, which ended on Aug. 31, was approximately $1.6 billion, down 45% from the same period a year earlier. Both the operating loss and the revenue were in line with preliminary results released last week.

The last week has been a busy one for BlackBerry CEO Thorsten Heins and his colleagues. In addition to the bombshell of its preliminary results, the company also announced around 4,500 lay-offs and cuts to the number of phone models it sells from six to four: two high-end and two entry-level phones aimed at the enterprise and "prosumer" market. Then on Monday it revealed it was preparing to sell the company to Fairfax Financial Holdings.

Although Blackberry has confirmed the financial results, "There is still a great degree of uncertainty," said analyst Geoff Blaber, director of devices and platforms at CCS Insight. "There is still an awful lot to happen following the Fairfax offer. The biggest element of uncertainty is what the new private company will become. My bet is it will be an enterprise service company, and devices are unlikely to be a part of that."

Originally, the company had scheduled a webcast and conference call with management on Friday to discuss the results, but those events were cancelled on Wednesday following the deal with Fairfax. However, BlackBerry plans to publish consolidated financial statements and a management discussion and analysis of results for its second quarter next week.

The postponement highlights the uncertainty surrounding the bid from Fairfax, Blaber said. "On an earnings call BlackBerry would expect to field a large number of questions on exactly that, and at the moment it can't answer them."

Reprinted with permission from IDG.net. Story copyright 2012 International Data Group. All rights reserved.

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BlackBerry readies BBM messaging app for Android, Apple

BlackBerry will this weekend take a historic fork in the road as it makes what was once its distinguishing application, BlackBerry Messenger (BBM), available for download to Android and Apple smartphone users.

Announced as an intention several weeks ago, Android 4.x users are expected to get access to the app on September 21 from Google's Play, followed 12 hours later for iPhone users from Apple's App Store.

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The move is an extraordinary moment for Blackberry and given that BBM messaging will be free also between users running the app, potentially disruptive for the mobile market as a whole if it can grab new users. There are currently no plans for a Windows Phone app.

The firm's strategy of turning BBM into a larger social platform explains why it has taken the interesting if risky decision to untether its messaging system from its own declining hardware and software platform.

"Later this year, BBM Channels will provide a forum for active, real conversations between you and the people, brands, celebrities, artists, service providers, communities and more, that matter to you," blogged BlackBerry's Donny Halliwell.

"By creating a Channel, individuals and brands can engage their friends and communities in conversations sparked by their thoughts, ideas and passions," he said, underlining BlackBerry's hope that BBM can become a mobile social network under the radar of operators as well as Google and Apple.

Since the company announced the move some time ago, it has been generally well received by the industry.

"The news that BBM is to appear on the Android platform suggests that the writing may be on the wall for BlackBerry as we know it," said AppSense chief development officer, Keith Turnbull at the time.

BBM's managed security environment could be another big lure for some users; BlackBerry will only make money if business users continue to pay license fees to use the server software, underwriting free consumer access.

"BlackBerry's greatest strength remains its popularity amongst enterprises due to a strong reputation for robust security. Recent independent research commissioned by AppSense revealed that only 12 percent of UK enterprises saw BlackBerry's as a potential security risk compared with 63 per cent of businesses believing that Android a high security risk," said Turnbull.

This security isn't as watertight as might have once been assumed, with a German newspaper recently claiming that there is evidence among the leaks made by Edward Snowden that the NSA might be able to access messages sent through the BlackBerry Enterprise Server (BES).

Elsewhere the news has been dire, with US media has reported that the firm is preparing to lay off 40 percent of its 12,700 workforce, a grudging confirmation by the old-style BlackBerry is now in deep trouble.

The company isn't giving up that easily, this week announcing its most powerful smartphone to date, the Z30, due for release later in 2013.

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BlackBerry expects $1B loss, will slash staff, reduce handset range

September 20, 2013 04:22 PM ETIDG News Service - Struggling smartphone maker BlackBerry has quantified just how bad business is at the moment, as users abandon its once-dominant platform.

The company said it plans to record a GAAP net operating loss during the July to September quarter of almost $1 billion as it writes down an excess of Z10 smartphones that it failed to sell.

It expects sales for the quarter to be around $1.6 billion, a drop of 45 percent from the same quarter in 2012, the company said Friday.

It sold around 5.9 million handsets, but will only recognize revenue on 3.7 million phones as the remainder had already been shipped to dealers in a previous quarter.

In light of the poor results, the company said it plans to restructure and lay off around 4,500 staff and cut the number of phones it sells from six to fourth handsets. Those phones will be targeted at the enterprise and prosumer markets.

"We are implementing the difficult, but necessary operational changes announced today to address our position in a maturing and more competitive industry, and to drive the company toward profitability," Thorsten Heins, BlackBerry president and CEO, said in a statement.

"Going forward, we plan to refocus our offering on our end-to-end solution of hardware, software and services for enterprises and the productive, professional end user. This puts us squarely on target with the customers that helped build BlackBerry into the leading brand today for enterprise security, manageability and reliability."

Despite Heins' focus on the future, many in the industry wonder just how long the company will be able to survive in the cut-throat smartphone market.

The company has already said it's evaluating "strategic alternatives." That's often code for a breakup of a company or acquisition by a competitor.

The BlackBerry 10 operating system came to market more than a year late at a time when many of its once-fanatical users had switched to rival platforms from Apple, Google and Microsoft. Friday's statement doesn't do much to reassure current users and investors that BlackBerry will be able to turn itself around.

Canada's stock market regulator suspended trading in BlackBerry shares a few minutes before the company made its announcement. The stock plummeted when trading resumed, at one point losing almost a quarter of its value.

BlackBerry is scheduled to announced full financial results for the second quarter on Sept. 27.

Reprinted with permission from IDG.net. Story copyright 2012 International Data Group. All rights reserved.

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U.S. and U.K. spies crack BlackBerry BES encryption, report says

IDG News Service - The U.S. National Security Agency is able to read messages sent via a corporate BlackBerry Enterprise Server (BES), according to a report by German news magazine Der Spiegel. The purpose of this spying is economic or political, and not to counter terrorism, the magazine hints.

The report, published in English on Monday, cites internal documents leaked by former NSA contractor Edward Snowden.

Governments have long demanded that BlackBerry provide access to encrypted messages carried by its email and BlackBerry Messenger (BBM) services, to allow them to monitor for terrorist activity.

BlackBerry has complied in the case of its consumer-grade BlackBerry Internet Service (BIS), notably providing the Indian government with access to consumer messages. Indeed, Der Spiegel cited NSA documents claiming that since 2009, analysts have been able to see and read text messages sent from BlackBerrys, and to collect and process BIS mails.

However, the company has always maintained that it cannot provide access to messages sent through its offering for corporate customers, BES, saying the encryption keys are known only to the company operating the BES.

However, among the documents leaked by Snowden are some that indicate the NSA, and its U.K. counterpart, the Government Communications Headquarters (GCHQ), can access text messages and emails sent between BES users, Der Spiegel said.

The two agencies have been targeting messages sent via BlackBerry's platform since before May 2009, when they ran into temporary difficulties that U.K. analysts later traced to a change in BlackBerry's messaging protocol following its acquisition of a smaller company. By March 2010, they were once again able to access the information, Der Spiegel said, citing GCHQ documents marked "UK Secret."

The leaked documents seen by Der Spiegel contain no indications of large-scale spying on smartphone users, but "If the intelligence service defines a smartphone as a target, it will find a way to gain access to its information," the magazine reported.

Der Spiegel said that to acquire BES data involves a sustained effort on the part of the NSA's Office of Tailored Access Operations, a specialized hacking team based in Forte Meade, Maryland.

An NSA presentation entitled "Your target is using a BlackBerry? Now what?" seen by the magazine shows what can be achieved. It contained an image of a Mexican government email, the plain text of which appears in a slide under the title "Post Processed BES collection."

Such cases raise questions for other states. As the magazine noted, the German federal government recently awarded a contract to BlackBerry for secure communications between federal agencies.

Ironically, though, other documents show the NSA is concerned about the effects on national security of BlackBerry's declining popularity among U.S. government employees. Between August 2009 and May 2012, the "only certified government smartphone" saw its share of the U.S. government smartphone market fall from 77 percent to 50 percent, the documents said.

Reprinted with permission from IDG.net. Story copyright 2012 International Data Group. All rights reserved.

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5 Reasons You Can Finally Ditch BlackBerry

CIO - Has BlackBerry finally reached the point of no return?

Last week, news spilled out that Waterloo, Ont.-based BlackBerry is up for sale. Meanwhile, IDC reported recently that BlackBerry sales are down 12 percent since last year, while the new line of BlackBerry 10 smartphones has fallen flat.

Exclusive: RIM CEO on What Went Wrong and the Future of BlackBerry

For large companies, though, this popular platform has a lingering presence. Many companies still use BlackBerry Enterprise Server-in fact, according to BlackBerry, 90 percent of all Fortune 500 companies are still BES customers. This includes a wide array of industries, from Vivent (a home security company) to the U.S. National Weather Service to the University of Pittsburgh Medical Center (UPMC), as well as 1 million government and defense customers.

Since the launch of BES10 in January, there have been more 19,000 installs worldwide, and 60 percent of Fortune 500 companies have tested the mobility management product. This past June, the company parlayed this widespread adoption: BES10 now works with Android and iOS devices.

Analysis: 10 Things BlackBerry Z10 Does That iPhone Can'tCommentary: Why a BlackBerry Is Better Than an iPhone

At the same time, there's something in the air. Market share has shifted to the iPhone and Android, the most innovative apps always seem to debut on the iPhone and the security landscape has changed. Even government agencies, including Immigration & Customs Enforcement and the National Transportation Safety Board, are dropping the BlackBerry for the iPhone.

For anyone in charge of mobile infrastructure, there are several reasons to consider finally ditching BlackBerry for good.

1. BYOD Makes BlackBerry Phones Redundant

Experts say we are now in the age of bring your own device (BYOD), even if some companies have failed to embrace the concept. Gavin Kim, the vice president of NQ Mobile, a security company, says the shift in business occurred a few years ago. At one time, most business users had a BlackBerry. Now that number is down to about 10 percent, he says, compared to the roughly 50 percent of business users who now have an iPhone.

Resources: All About BYOD Guide and Your BYOD Field Guide

BES10 added support for other phones too late, Kim suggests. Also, competition from similar asset management and security platforms, such as the Samsung KNOX, make it harder to justify sticking with BlackBerry smartphones.

2. So Does Mobile Device Management

MDM firms are also crying foul. AirWatch recently announced that Merck, the pharmaceutical based in Germany, had decided to ditch the BlackBerry in favor of Android and iOS models. The move was meant to increase productivity. Merck even has an internal enterprise application store for Android and iOS apps. Leading MDM companies are like the overlords of mobile infrastructure: When they start losing interest in a platform, large companies usually take notice and follow suit.

3. Analysts Bullish About BlackBerry's Future

Business analysts have downplayed the importance of BlackBerry devices for the past few years. Roger Kay, an analyst with Endpoint Technologies, says the prospects look dim. While there are still BES users in every sector, the defections have started.

News: BlackBerry 10 Sales Figures Disappoint Analysts; Firm Asks for PatienceMore: Photos of BlackBerry Z30 Emerge Amid Difficult Times for Smartphone Maker

"They really have nowhere to go," he says. "The core value propositions of security and keyboard input has been negated by the other platforms."

4. Innovative App Developers Eschew BlackBerry

You can still find basic business apps for BlackBerry; some, including Evernote, are even baked into the operating system. There are plenty of consumer apps for BlackBerry 10, too. But few innovative mobile app developers have even bothered with BlackBerry. Companies such as Zensorium, which makes a sensor for the iPhone, and Cue, whose eponymous app reads your email to help you manage your schedule, don't make a BlackBerry app because they know the market share has slipped. For business users, this means falling behind the latest trends.

5. Security Innovations Erode BlackBerry's Advantage

Security isn't just the purview of large enterprise-grade providers such as Good Technology any more. The landscape has changed to include on-device protections such as face recognition (which is admittedly flawed) and complex passcodes.

There are now hundreds of choices when it comes to protecting devices. Apps such as Cobra Tag can help you find a lost phone. You can enable full hardware encryption on an Android device before the OS even boots. Finally, Divide and other apps work well for separating work and personal files on iOS devices.

John Brandon is a former IT manager at a Fortune 100 company who now writes about technology. He has written more than 2,500 articles in the past 10 years. You can follow him on Twitter @jmbrandonbb. Follow everything from CIO.com on Twitter @CIOonline, Facebook, Google + and LinkedIn.

Read more about blackberry in CIO's BlackBerry Drilldown.

This story is reprinted from CIO.com, an online resource for information executives. Story Copyright CXO Media Inc., 2012. All rights reserved.

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