[Deckard79]

I am assuming that a significant portion of the $501 million writedown of assets was in relation to unsold Priv devices.

Would I be right in that assumption?

And if so, surely this could have been avoided by either:

a) Selling the Priv at a less delusional price point from the off
b) Reducing the price of the Priv to something more realistic, given it would immediately have been clear that sales were in the gutter?

[Dunt Dunt Dunt]

Haven't heard an explanation of what it was....

BlackBerry didn't have many physical assets anymore. I would imagine it had more to do with GOOD and some of their assets that might have been inflated to make them look more attractive to a buyer. But that now that BlackBerry is the owner it's better to devalue them.

BlackBerry's once again changing how they report stuff (they do that once a year now), and it might take the release of the full financial report to figure out some of this stuff (if ever).

[Denise in Los Angeles]

Could be the unsold BB10 phones too. They still have unsold Passports, Leaps and Classics.

[Dunt Dunt Dunt]

"BlackBerry said the net loss reflected a US$501mil (RM2bil) impairment charge, a US$57mil (RM227.7mil) goodwill impairment charge, and a US$41mil (RM163.8mil) writedown of inventory and other charges."

"An Impairment Charge is incurred when the fair value of a company's goodwill is less than the recorded value. If the fair value of goodwill is less than the recorded value, a company's goodwill is said to be "impaired" and the difference (between the fair value and recorded value) must be charged off as an expense."

The $41 Million might include unsold BB10 phones... but the $501 Million is more about writing off value that doesn't exist anymore. Probably has to do with GOOD and BlackBerry paying more for them than they were actually worth (on the books).

[Dunt Dunt Dunt]

Chen did mention in the conference call that the impairment charge was required because of the changes in how they are now breaking out revenue by business segment.

[Prem WatsApp]

... but realistically this is only bookwork, didn't affect cash flow or the real juices, did it....?

:-D

�   There's a Crack in the Berry right now...   �

[blackberrybrad]

... but realistically this is only bookwork, didn't affect cash flow or the real juices, did it....?

:-D

�   There's a Crack in the Berry right now...   �

You would be correct. The write down of the value of inventory is money they most likely already spent, this is just changing a value of a line on the value sheet.

The only downfall is that it gives the media a way to say BlackBerry lost lots of money. Yes on paper, but if you looked in the bank account things seem okay.

Posted via CB10

[JeepBB]

The only downfall is that it gives the media a way to say BlackBerry lost lots of money. Yes on paper, but if you looked in the bank account things seem okay.

The days when anyone looked at BlackBerry's bank account and said "hmmm, that seems okay" are long gone.

[early2bed]

Well, it does make a difference to people who constantly howl about how ridiculous it is that the stock price hovers around book value.

[Troy Tiscareno]

... but realistically this is only bookwork, didn't affect cash flow or the real juices, did it....?

It absolutely will affect cash flow. For example, with the Priv, those phones were made with the promise of making BB around $200 in profit for each phone sold. The write-down is a reflection that most of that profit potential is gone with their remaining stocks of phones, and that the ASP and total revenue in the next couple of quarters is going to fall as a result. That may not have happened yet, but it will happen, and legally BB is required to publicly acknowledge this so that their shareholders aren't left believing that the inventory still on the books is potential profit.

If you owned your own business, and paid your own money to manufacturer a bunch of goods (10,000 widgets, let's say) and you sold 5,000 at a profit, but then sales fell off and you had to sell the other 5,000 at cost, that would be real money that was lost to you, right? Well, it is to BB and BB's shareholders too.

[eshropshire]

"BlackBerry said the net loss reflected a US$501mil (RM2bil) impairment charge, a US$57mil (RM227.7mil) goodwill impairment charge, and a US$41mil (RM163.8mil) writedown of inventory and other charges."

"An Impairment Charge is incurred when the fair value of a company's goodwill is less than the recorded value. If the fair value of goodwill is less than the recorded value, a company's goodwill is said to be "impaired" and the difference (between the fair value and recorded value) must be charged off as an expense."

The $41 Million might include unsold BB10 phones... but the $501 Million is more about writing off value that doesn't exist anymore. Probably has to do with GOOD and BlackBerry paying more for them than they were actually worth (on the books).

Maybe, but the way I read the statement, I think they are just writing down the value of the phone business. A company has goodwill in the value of the business. The phone business has lost a lot of goodwill value. If they could sell the business today it would be worth a lot less that it was several years ago. The phone business is currently an asset for BlackBerry, but it is just not as valuable as it once was and they need to account for the change.

MS is doing the same with their phone business. As they have been shutting down more and more of their phone business, MS has been writing off the value of their phone business - not hardware inventory, but the actually value of the business. All signs right now point to MS getting out the phone business, when the make the final plunge it will have almost zero effect on their balance sheet because the have already written off the value of the business.

[Troy Tiscareno]

It isn't just the phone business. For example, BBM was spun off into its own division, but its value has also dropped as users continue to exit the platform. Even in formerly super-strong markets like Nigeria and Indonesia, BBM is losing users to other alternatives.

[Prem WatsApp]

It absolutely will affect cash flow. For example, with the Priv, those phones were made with the promise of making BB around $200 in profit for each phone sold. The write-down is a reflection that most of that profit potential is gone with their remaining stocks of phones, and that the ASP and total revenue in the next couple of quarters is going to fall as a result. That may not have happened yet, but it will happen, and legally BB is required to publicly acknowledge this so that their shareholders aren't left believing that the inventory still on the books is potential profit.

If you owned your own business, and paid your own money to manufacturer a bunch of goods (10,000 widgets, let's say) and you sold 5,000 at a profit, but then sales fell off and you had to sell the other 5,000 at cost, that would be real money that was lost to you, right? Well, it is to BB and BB's shareholders too.

I was more looking at the $500m than the $40/50m...

:-)

�   There's a Crack in the Berry right now...   �

[curves2000]

I was more looking at the $500m than the $40/50m...

:-)

�   There's a Crack in the Berry right now...   �

Prem,

I believe the larger write down was as a result of moving to segment reporting. On the conference call with analysts the CFO mentioned when BlackBerry had consulted with their accounting experts on the "value" of some of their Good technology and other assets. When reviewing the portfolio they found that they needed to reduce the value.

I maybe partially correct but from what I recall listening it was something to do with segment reporting and the other assets with acquisitions.

Hope this helps SOMEWHAT.

Posted via CB10

[Prem WatsApp]

Prem,

I believe the larger write down was as a result of moving to segment reporting. On the conference call with analysts the CFO mentioned when BlackBerry had consulted with their accounting experts on the "value" of some of their Good technology and other assets. When reviewing the portfolio they found that they needed to reduce the value.

I maybe partially correct but from what I recall listening it was something to do with segment reporting and the other assets with acquisitions.

Hope this helps SOMEWHAT.

Posted via CB10

Yes, I think Good is actually worth less than what they paid for, but might be worth more once everything is integrated.

Plus, they got rid of one of their main competitors and gained more relevance altogether due to increased overall market share... :-)



�   There's a Crack in the Berry right now...   �

[JulesDB]

Yes, I think Good is actually worth less than what they paid for, but might be worth more once everything is integrated.

Plus, they got rid of one of their main competitors and gained more relevance altogether due to increased overall market share... :-)



�   There's a Crack in the Berry right now...   �

In fact I don't understand why there's not Good for BlackBerry10.

Anyway Good on iPad is not that confortante compared to BlackBerry and its BES, you need to tap on the icon and then login every time... for all that matter I don't understand where's better...

Posted via CB10

[Troy Tiscareno]

In fact I don't understand why there's not Good for BlackBerry10.

Because even BB can see that there isn't enough demand to make a profit on making a BB10 client. It's the same reason other companies don't make BB10 apps - not enough users means there won't be any ROI (return on investment).

[JulesDB]

Because even BB can see that there isn't enough demand to make a profit on making a BB10 client. It's the same reason other companies don't make BB10 apps - not enough users means there won't be any ROI (return on investment).

I get your point but I guess that's not quite exact: the company I work in (very big insurance company), is long time looking for the right smartphone.

I mean: iPhone is expensive and poor in battery performance, Windows phone is not well supported, Android doesn't deliver the performance and security my company is looking for. As for now, we are using old BBOS 7 HW keyboards devices and waiting for not defined new ones.

Also: the company doesn't want to use a dedicated BES server anymore, so Good it's OK at the moment.

I am quite sure it that BlackBerry10 would be the perfect product BUT BlackBerry itself isn't delivering the ideal solution to the clients already using BlackBerry and Good and keeping the customers that already has...

I know tha it would be only few thousand devices, not too much for a big firm like BlackBerry, but I am sure that other companies are looking for the same solution.

[_dimi_]

"BlackBerry said the net loss reflected a US$501mil (RM2bil) impairment charge, a US$57mil (RM227.7mil) goodwill impairment charge, and a US$41mil (RM163.8mil) writedown of inventory and other charges."

"An Impairment Charge is incurred when the fair value of a company's goodwill is less than the recorded value. If the fair value of goodwill is less than the recorded value, a company's goodwill is said to be "impaired" and the difference (between the fair value and recorded value) must be charged off as an expense."

The $41 Million might include unsold BB10 phones... but the $501 Million is more about writing off value that doesn't exist anymore. Probably has to do with GOOD and BlackBerry paying more for them than they were actually worth (on the books).

Did you miss the part where they claimed the impairment had to do mostly with hardware IP? Stop assuming.

Posted via CB10

[Troy Tiscareno]

I know tha it would be only few thousand devices, not too much for a big firm like BlackBerry, but I am sure that other companies are looking for the same solution.

Even if everything you say is true, your company could still veto BB10 just based on the lack of apps/ecosystem, and that's only going to continue getting worse. Plus, as you said, you're only talking a few thousand devices. They can't even break even on BB10 unless they can sell 10 million devices per year; the costs of development (which BB has to pay 100% of) means that it takes that many phones to spread the development cost around on just to get to the point where they aren't losing money. And BB10 was never at that level of sales, even the first full quarter when they had big marketing and advertising campaigns going and FAR better app support.

It only matters "how good BB10 is" if it can make a profit for BB - if it can't, then it isn't a viable product, and that's why BB pulled the plug - they lost a ton of real cash plus a ton of market value with BB10, and never got to the point where they could even see light at the end of the tunnel financially, much less reach it. And BB10's prospects of turning a profit now are orders of magnitude worse than in 2013.

[nohope4me]

I'm sure these are the privs showing up everywhere for $300

[andy957]

Could be the unsold BB10 phones too. They still have unsold Passports, Leaps and Classics.

Bell is still selling the Passport for $149 on a 2-year contract. No wonder there are unsold Passports.

Posted via the CrackBerry App for Android