- Latin American currency plunge cuts deep into revenue
- Bet on Amazon app store ended with Fire Phone getting pulled
BlackBerry Ltd. just can’t catch a break.
The poor performance of Amazon.com Inc.’s own smartphone and Venezuelan currency controls contributed to a second-quarter earnings loss and the company’s decision to begin selling a phone running Android, Chief Executive Officer John Chen said.
BlackBerry made a bet that cutting a deal with Amazon to let its users access the e-commerce giant’s application store would keep them from leaving BlackBerry for the app-rich environments of Apple Inc. and Google Inc.’s Android. If more people had bought Amazon’s phone, developers would have made more applications for its app store, benefiting BlackBerry in the process, Chen said.
“I was dying to have Amazon be successful with their phone,” he said at a meeting with reporters at BlackBerry’s headquarters in Waterloo, Ontario.
That didn’t happen. Even after cutting its price to 99 cents three months after its debut, the Fire phone never caught on with consumers and Amazon stopped selling it earlier this month.
BlackBerry shipped 800,000 phones in the quarter ended Aug. 29, the fewest since at least 2007. Revenue dropped 47 percent to $490 million and the company’s shares fell 7.7 percent to $6.49 at the close in New York.
Amazon’s phone flop wasn’t BlackBerry’s only "Black Swan" -- a term used to describe an unpredictable economic event. Revenue from Latin America plunged 70 percent to $33 million from a year earlier, contributing to an earnings loss of 13 cents a share. Analysts had estimated a loss of 9 cents.
The drop was caused by currency controls in Venezuela, one of BlackBerry’s key markets, Chen said. The rout in the price of oil had pared back the country’s export revenue and created a shortage of U.S. dollars to import goods from abroad, and smartphones aren’t the highest priority.
Pyramid Research estimates Venezuelans will buy 4.9 million devices, from all manufacturers, in 2015. That’s down 46 percent from the almost 9 million sold in 2012.
“They have U.S. foreign currency control, dollar control and it’s just very difficult,” he said.