BlackBerry’s fiscal Q3 results raise red flags

BlackBerry announced its fiscal Q3 2014 to November 30 results, with the company revealing a US$4.4 billion GAAP-adjusted loss for the quarter, which included a write-down on current inventory of around US$1.6 billion. BlackBerry “recognised revenue” on only 1.9 million handsets, compared to 3.7 million in the same period a year ago, but it claims that it sold around 4.3 million BlackBerrys through to end-customers, of which 3.2 million were BlackBerry 7 handsets.

BlackBerry stressed the growth of Enterprise Services, Messaging, and QNX Embedded OS in auto and cloud as high points, and noted a change in corporate structure in which those are given more equal weight against its Devices unit. And as for the Devices unit, BlackBerry announced a partnership with Foxconn that will span five years and kick off with a smartphone unit designed specifically for “Indonesia and other fast-growing markets in early 2014.”

This partnership could offload the majority of BlackBerry’s hardware inventory management duties to Foxconn, and Mexico is named as another early target for devices coming out of the arrangement.

Essentially, it sounds like BlackBerry is making Foxconn a licensee with control over its smartphone division, while it continues to work on services and software in-house.