Blackberry 2014 Annual Report Download - page 147

BlackBerry Limited
Management’s Discussion and Analysis of Financial Condition and Results of Operations
17
Results of Continuing Operations
Fiscal year ended March 1, 2014 compared to fiscal year ended March 2, 2013
Revenue
Revenue from continuing operations for fiscal 2014 was $6.8 billion, a decrease of approximately $4.3 billion, or 38.5%, from
$11.1 billion in fiscal 2013.
Comparative breakdowns of the significant revenue categories and geographic regions are set forth in the following table:
For the Fiscal Year Ended
March 1, 2014 March 2, 2013 Change Fiscal 2014/2013
Millions of BlackBerry handheld
devices recognized 13.7 28.1 (14.4) (51.2)%
Revenue (in millions)
Hardware $ 3,785 55.5% $ 6,648 60.0% $ (2,863) (43.1)%
Service 2,698 39.6% 3,910 35.3% (1,212) (31.0)%
Software 235 3.5% 261 2.4% (26) (10.0)%
Other 95 1.4% 254 2.3% (159) (62.6)%
$ 6,813 100.0% $ 11,073 100.0% $ (4,260) (38.5)%
Revenue by Geography (in millions)
North America $ 1,811 26.6% $ 2,896 26.2% $ (1,085) (37.5)%
Europe, Middle East and Africa 2,991 43.9% 4,502 40.7% (1,511) (33.6)%
Latin America 907 13.3% 2,114 19.1% (1,207) (57.1)%
Asia Pacific 1,104 16.2% 1,561 14.0% (457) (29.3)%
$ 6,813 100.0% $ 11,073 100.0% $ (4,260) (38.5)%
Revenue by Category
Hardware Revenue
Hardware revenue was $3.8 billion, or 55.5% of consolidated revenue, in fiscal 2014 compared to $6.6 billion, or 60.0% of
consolidated revenue, in fiscal 2013, representing a decrease of 43.1%. This decrease in hardware revenue over the prior fiscal
year was primarily attributable to a decrease in the volume of BlackBerry handheld devices recognized by approximately 14.4
million, or 51.2%, to approximately 13.7 million BlackBerry handheld devices in fiscal 2014, compared to approximately 28.1
million BlackBerry handheld devices recognized in fiscal 2013. The majority of the devices recognized in fiscal 2014 were
BlackBerry 7 devices. The Company believes that the significant decrease in hardware revenue over the prior fiscal year was
primarily attributable to decreased demand and lower sell-through for the Company's new devices, due to the very intense
competition. Significant judgment is applied by the Company to determine whether shipments of devices have met the
Company’s revenue recognition criteria, as the analysis is dependent on many facts and circumstances. The Company also
believes that uncertainty surrounding its recently completed strategic review process, as well as previously disclosed
announcements concerning the Company's operational restructuring, recent management changes and the Company's
workforce reductions, may have continued to negatively impact demand for the Company's products in fiscal 2014. In order to
improve sell-through levels and stimulate global demand for BlackBerry devices, the Company continues to implement sell-
through programs with its carrier and distributor partners. As previously disclosed, the Company can no longer reasonably
estimate the amount of the potential sell-through programs that may be offered on certain BlackBerry devices in future periods,
resulting in revenues for BlackBerry 10 devices, and BlackBerry 7 devices in certain regions, being recognized when the
devices sell through to end customers. See “Accounting Policies - Revenue Recognition”.
During fiscal 2014, approximately 20.5 million BlackBerry smartphones were sold through to end customers, which included
shipments made and recognized prior to fiscal 2014 and which reduced the Company's inventory in channel. Of the devices that
sold through to end customers in fiscal 2014, approximately 15.5 million were BlackBerry 7 devices. The number of
BlackBerry smartphones that were sold through to end customers was 36.1 million in fiscal 2013.