Investors rarely applaud widening billion-dollar losses. However, that's exactly what we're seeing out of mired-Canadian smartphone-maker BlackBerry (NASDAQ:BBRY) in the wake of its abysmal third-quarter earnings report. BlackBerry shares are rallying as of midday on Friday on the back of what's thus far been the worst loss in the company's corporate history.

The ongoing turnaround efforts at BlackBerry under new CEO John Chen are, without question, a complex and highly divisive issue. Let's take a look at the key storylines driving BlackBerry today.

Bad and getting worse
Let's just get this out of the way before we keep digging: BlackBerry's financial performance was nothing short of abysmal during the third quarter.

The top- and bottom-line figures absolutely fell off a cliff. Revenue for the quarter declined 56% from a year before to $1.2 billion, the lowest top-line figure since 2007. Even more eye-popping, BlackBerry's net income plummeted to a net loss of $4.4 billion, or a loss of $8.37 per share, a large part of which was driven by a $4.6 billion dollar writedown charge. Even after backing out the above charges, BlackBerry still posted an adjusted net loss of $354 million, which sits squarely below the $9 million in profits posted in the same quarter last year.

BlackBerry's cash balance, a key figure as the company is likely to continue to hemorrhage cash in the short term, sits at $3.2 billion, up from $2.6 billion last quarter.

However as alluded to earlier, BlackBerry managed to revive at least some investors' spirits with this report, as well.

Down, but still fighting
Looking past its financials, BlackBerry is making several key moves that should help strengthen its chances on executing its turnaround plans to some degree.

For starters, new CEO John Chen announced a corporate reorganization that adds a lot of clarity in the areas that will drive BlackBerry's future performance, for better or worse. The new operating structure will include four reporting divisions: Enterprise Services, Messaging, QNX Embedded Businesses, and Devices.

Beyond that, BlackBerry cleared another major hurdle by announcing it had entered into a deal with Chinese firm Foxconn to handle BlackBerry's hardware development and manufacturing for the next five years. This deal will help BlackBerry circumvent at least a significant portion of the inventory overhang that has plagued it over the last several years. Going forward, Chen mentioned that he'd be fine with seeing BlackBerry's devices business become a break-even or low-margin business.

Overall, Chen hopes to have BlackBerry cash flow neutral by the end of next year.

Still a tall order
This all sounds great. BlackBerry appears to have found ways around many of its most significant problems. However, many still remain before BlackBerry can be considered anywhere close to out of the woods.

In making these moves, BlackBerry is, without question, betting its future on services. So, the $10 billion dollar question then becomes, can BlackBerry monetize its services enough to eventually have a profitable, sustainable future? That's still hugely unclear, as well.

Its reorganization has untethered BlackBerry's software services from its devices, which increases BlackBerry's addressable market for these service by million of devices. Its enterprise business still has a global customer base of over 80,000, and BBM has made impressive inroads since it was rolled out to iOS and Android earlier this year.

In both these areas, BlackBerry's established presence and branded services certainly serve as positives. However, these are also growth spaces, in general, that are attracting interest from a growing host of capable competitors.

In the final analysis, Blackberry undisputedly made progress in aligning its business with the places it stands the best chances of enjoying sustained success. However, the company is still facing an uphill battle to stabilize itself enough to make me a believer. We'll just have to wait and see.

Fool contributor Andrew Tonner has no position in any stocks mentioned. Follow Andrew and all his writing on Twitter at @AndrewTonnerThe Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.