Blackberry 2015 Annual Report Download - page 132

BlackBerry Limited
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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those available in the iOS and Android environments, and the other factors described above. To address this decline, the
Company worked with developers to ensure that a broad spectrum of applications including games, multimedia, productivity,
enterprise and social media applications would be available on BlackBerry 10 smartphones prior to their introduction. Sales in
the United States were also impacted by the significant number of new Android-based competitors that entered the market.
Europe, Middle East and Africa Revenues
Revenues in Europe, Middle East and Africa were $3.0 billion or 43.9% of consolidated revenue in fiscal 2014, reflecting a
decrease of $1.5 billion compared to $4.5 billion or 40.7% of consolidated revenue in fiscal 2013. Some of the larger markets
comprising this region include the United Kingdom, South Africa and United Arab Emirates. The Company launched
BlackBerry 10 devices in many countries in this region in fiscal 2014 including Saudi Arabia, the United Arab Emirates, South
Africa, the United Kingdom, Slovakia, Austria, Netherlands, Nigeria, France, Germany, Italy, Spain, Turkey, Switzerland,
Kuwait, Lebanon, Iraq and Pakistan.
Latin America Revenues
Revenues in Latin America were $907 million or 13.3% of consolidated revenue in fiscal 2014, reflecting a decrease of $1.2
billion compared to $2.1 billion or 19.1% of consolidated revenue in fiscal 2013. Some of the larger markets comprising this
region include Argentina, Colombia and Venezuela. The Company launched BlackBerry 10 devices in many countries in this
region in fiscal 2014 including Mexico, Colombia, Chile, Brazil, Ecuador and Peru.
Asia Pacific Revenues
Revenues in Asia Pacific were $1.1 billion or 16.2% of consolidated revenue in fiscal 2014, reflecting a decrease of $457
million compared to $1.6 billion or 14.0% of consolidated revenue in fiscal 2013. Some of the larger markets comprising this
region include Indonesia and India. In fiscal 2014, the Company launched BlackBerry 10 devices in many countries in this
region including Australia, Hong Kong, the Philippines, Malaysia, India, Indonesia and Singapore.
Gross Margin
Consolidated gross margin from continuing operations decreased by $3.5 billion, to a loss of $43 million, or (0.6)% of
consolidated revenue, in fiscal 2014, compared to $3.4 billion, or 31.0% of consolidated revenue, in fiscal 2013. Excluding the
impacts of the Q3 Fiscal 2014 Inventory Charge, the Z10 Inventory Charge, the Q4 Fiscal 2014 Inventory Recovery, charges
related to the CORE program incurred in fiscal 2014, of which $103 million was attributable to cost of sales, and the impact of
charges related to the CORE program incurred in fiscal 2013, of which $96 million was attributable to cost of sales, gross
margin decreased by $1.1 billion.
The $1.1 billion decrease in consolidated gross margin was primarily attributable to decreases in service revenue and the
number of devices for which revenue was recognized compared to fiscal 2013. The majority of the devices recognized in fiscal
2014 were BlackBerry 7 devices, which, for much of fiscal 2014, had lower gross margins than Blackberry 10 devices. The
decrease in consolidated gross margin also reflected the Company's fixed costs being allocated over lower shipment volumes.
Hardware revenues have lower gross margins than the Company’s consolidated gross margin. Service revenues earn higher
gross margins than sales of handheld devices.