BlackBerry today reported a Q3 2014 operating loss of $4.4 billion, up from $965 million in the previous quarter, primarily due to one-time charges related to unsold smartphones and the decline in value of the company's assets.

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"During the third quarter, the Company recognized hardware revenue on approximately 1.9 million BlackBerry smartphones compared to approximately 3.7 million BlackBerry smartphones in the previous quarter," BlackBerry reported. "Most of the units recognized were BlackBerry 7 devices. During the quarter, approximately 4.3 million BlackBerry smartphones were sold through to end customers, which included shipments made and recognized prior to the third quarter and which reduced the Company’s inventory in channel. Of the BlackBerry smartphones sold through to end customers in the third quarter, approximately 3.2 million were BlackBerry 7 devices."

BlackBerry 7 was replaced by BlackBerry 10 early this year, but sales aren't good. Of the $4.4 billion quarterly loss, $1.6 billion is "a primarily non-cash, pretax charge against inventory and supply commitments, or $1.3 billion after tax, which is primarily attributable to BlackBerry 10 devices," the company said.

A further $2.7 billion charge is attributed to "a non-cash, pretax charge against long-lived assets." BlackBerry warned such a charge could be possible in a Securities and Exchange Commission filing after the end of the previous fiscal year. Essentially, the charge recognizes a decline in value of the company's infrastructure due to the fact that its revenue isn't high enough to support that infrastructure.

"As at March 2, 2013, the Company’s long lived assets had a carrying value of approximately $5.8 billion. The assets represent items such as the Company’s network infrastructure, owned office buildings and certain intellectual property, among others," BlackBerry said. "The current macroeconomic environment and competitive dynamics continue to be challenging to the Company’s business and the Company cannot be certain of the duration of these conditions and their potential impact on the Company’s ability to generate sufficient cash flows to fully recover the current carrying value of these assets. If it is determined that sufficient future cash flows do not exist to support the current carrying value, the Company will be required to record an impairment charge for long lived assets in order to adjust the value of these assets to the newly established estimated value."

In today's earnings report, BlackBerry said the $2.7 billion charge was based on the results of an analysis of its long lived assets. Separately, there were "pre-tax restructuring and legal and financial advisory charges of approximately $266 million."

The $4.4 billion loss compared to a profit of $14 million in the same quarter last year. BlackBerry lost $965 million in Q2 2014, primarily because it overestimated how many new phones it would sell.

Excluding all of the one-time charges, BlackBerry's operating loss was $354 million for the quarter, up from an adjusted loss of $248 million in the prior quarter and up from $114 million in Q3 2013.

Despite the bad news, BlackBerry CEO John Chen struck a positive tone. “With the operational and organizational changes we have announced, BlackBerry has established a clear roadmap that will allow it to target a return to improved financial performance in the coming year,” Chen said in the earnings announcement. “While our Enterprise Services, Messaging and QNX Embedded businesses are already well-positioned to compete in their markets, the most immediate challenge for the Company is how to transition the Devices operations to a more profitable business model.”

BlackBerry did increase the amount of its cash, cash equivalents, short-term and long-term investments from $2.6 billion at the end of the second quarter to $3.2 billion at the end of Q3.

BlackBerry will continue to reduce operating expenses in Q4, the company said. As for its partnership with Foxconn, the five-year agreement means that "Foxconn will jointly develop and manufacture certain new BlackBerry devices and manage the inventory associated with those devices... BlackBerry will own all of its intellectual property and perform product assurance on devices through the Foxconn partnership, as it does currently with all third-party manufacturers." This will reduce BlackBerry's risks related to unsold products.