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As expected, Canadian handset maker BlackBerry has reported a net loss of $965 million for the quarter ending August 31, 2013, a significant increase from $235 million loss in the same quarter last year and $84 million loss in the previous quarter.

This was primarily due to a $934 million writedown for unsold BlackBerry Z10 inventory, its first smartphone running on BlackBerry 10 operating system which was introduced earlier this year.

Operating Highlights

– BlackBerry sold 5.9 million smartphones to end customers, although it recognized revenue from only 3.7 million smartphones. This includes the shipments made prior to the quarter. The company said most of the units recognized were older BlackBerry 7 smartphones since certain BlackBerry 10 devices which were shipped during the quarter, will not be recognized until it is sold through to end customers.

Hardware sales contribution:  The contribution of hardware sales to BlackBerry’s revenues has declined to 49% for the quarter, down from 60% in the same quarter last year and 71% in the previous quarter.

Services Contribution: On the other hand, the company said it is witnessing a significant increase in BlackBerry Enterprise Service 10 (BES 10) with more than 25,000 commercial and test servers installed to date, up from 19,000 servers in July 2013.

– The contribution of services to BlackBerry’s revenues has also increased to 46% for the quarter, up from 35% in the same quarter last year and 26% in the previous quarter.

– The contribution of software and other revenue has increased year-on-year to 5%, up from 3% in the same quarter last year but flat from 5% in the previous quarter.

Financials

BlackBerry reported total revenues of $1.6 billion for the quarter, a significant 45% decline from $2.9 billion revenues in the same quarter last year and a 49% decline from $3.1 billion revenues in the previous quarter.

Excluding the impact of $934 million Z10 Inventory Charge and the $72 million restructuring charge due to BlackBerry’s Cost Optimization and Resource Efficiency (“CORE”) program, BlackBerry has posted an adjusted loss of $248 million.

APAC revenues: Similar to other geographies, the Asia Pacific (APAC) region also reported declined revenues of $277 million revenue for the quarter, down from $385 million in the same quarter last year and $518 million in the previous quarter. APAC Region currently accounts for 17.6% of BlackBerry’s total revenues. Europe, Middle East and Africa (EMEA) continues to be the top contributor for BlackBerry revenues, reporting $686 million revenue for the quarter, which represents 43.6% of the company’s total revenues for the quarter.

BlackBerry Buyout Offer: Earlier this month, BlackBerry had announced that it had received a $4.7 billion buyout offer from a consortium led by Fairfax Financial Holdings Limited, which intends to take the company private. The consortium is currently conducting due diligence which is expected to end by November 4, 2013.

During the due diligence period, BlackBerry can however request, receive, evaluate and potentially enter into negotiations with other parties for alternative proposals, but the Fairfax consortium also has the right to match the offer. If BlackBerry does accept a rival offer, it will have to pay a termination fee to Fairfax (More on this here).

Cashflow: BlackBerry has a total of cash, cash equivalents, short-term and long-term investments of $2.6 billion as of August 2013, as compared to $3.1 billion in the previous quarter. During the quarter, the company used $136 million cash flow in operations.

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