BlackBerry facing writedown over BlackBerry 10 device inventory

BlackBerryThere is more bad news for BlackBerry today. The company is reportedly facing the prospect of a major financial writedown due to significant unsold inventory of BlackBerry 10 devices, especially in the U.S. where the new devices have failed to catch on. BlackBerry could announce the writedown as early as next week when it announces its latest financial results but it could also choose to wait one more quarter to see if sales improve, especially as it introduces new models such as the BlackBerry Z30.

The writedown may be required to account for the declining value of unsold inventory sitting in warehouses and on retail partners’ shelves. Its exact value is not known but BlackBerry reported total inventories of US$887 million back on June 1st. It would be the company’s fourth writedown in the last two years. As Research In Motion, it already recorded three as it transitioned from BlackBerry 7 to BlackBerry 10.

BlackBerry is in the midst of an “Exploration of Strategic Alternatives” and hoping to sell itself within weeks. With the handset business seen as being of little value to a potential buyer, BlackBerry may simply shut it down and focus on becoming a software company.

The news of a financial writedown comes only days after reports that the company was ready to cut as much as 40 percent of its workforce by the end of its fiscal year in early 2014.

Source : The Globe and Mail