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BlackBerry's Loss: Here's The Extent of the Crisis

Alex Dumortier, CFA
December 20, 2013

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Roll on the recovery! Third-quarter GDP growth was revised higher this morning to an annualized rate of 4.1% from 3.6%, versus expectations of a flat revision. Better yet, growth in consumer spending was revised upward by 0.6 percentage point to 2%. These numbers bolster the case for the Federal Reserve's decision Wednesday to scale back its monthly bond-buying program. Not surprisingly, stocks opened higher this morning, with the S&P 500 and the narrower Dow Jones Industrial Average (DJINDICES: ^DJI) up 0.36% and 0.39%, respectively, at 10:13 a.m. EST.

When a company's quarterly per-share loss exceeds its share price, you know it's facing desperate times. That's the situation BlackBerry (NASDAQ: BBRY) is in this morning, having reported a net loss of $8.37 per share for its fiscal third quarter that ended Nov. 30. No wonder the company couldn't bear to put that figure on the first page of its earnings press release, opting instead to relegate it to Page 2.

The loss is a result of a massive $4.6 billion charge "associated with long-lived assets, inventory and supply commitments, and previously announced restructuring and strategic review process," according to the smartphone maker. In some situations, a company might get away with calling such a charge a "one-time" or "exceptional" item, but recall that BlackBerry took almost a $1 billion charge in the previous quarter to write down the value of inventory of its new Z10 handset, which isn't selling.