BlackBerry's swelling inventory of unsold smartphones is approaching the US$1 billion mark, raising the chance the company will make its fourth write-down in two years when it posts earnings next week.
BlackBerry reported a 47 per cent gain in the value of its inventory in the second quarter of the year, bringing the figure to US$887 million. That figure might have risen again in the third quarter as sales continued to sputter, said Brian Huen, a managing partner at Red Sky Capital Management.
The struggling Canadian mobile-phone maker announced last month that it was open to takeover bids, hurting already sluggish sales because customers became more skittish about the company's future, Huen said.
Inventory had been growing, he said, and depending on how much money BlackBerry had spent producing the phones, "another write-down is likely".
Writing off the unsold phones would put a dent in net income and signal that the BlackBerry 10 operating system is not fuelling a turnaround for the company.
The move also would extend a streak of inventory charges, which were spurred in part by the ill-fated PlayBook tablet. The company took a pre-tax expense of US$485 million in December 2011, a second charge of US$267 million in March last year and a third write-down of US$335 million three months later.
The prospect of more write-downs is looming as the company tries to streamline its workforce, potentially bringing restructuring expenses as well. The Wall Street Journal reported on Wednesday that BlackBerry was looking to shed as much as 40 per cent of its staff.
While a company spokesman declined to comment on the figure, he did say "organisational moves will continue to occur".
BlackBerry chief executive Thorsten Heins was counting on the new BlackBerry 10 phones - introduced in January to good reviews - to reverse a sales slide, return the company to profitability and make the brand hip again. Instead, its market share continues to slide and BlackBerry remains unprofitable.
Corporate customers are holding off on upgrading to the new platform, concerned that the company might not be around to support the devices.
Still, BlackBerry continues to introduce new products. In addition to the Q10, Z10 and Q5 released this year, it introduced the Z30, a model with the company's largest screen yet, on Wednesday. It goes on sale in Britain and the Middle East next week.
BlackBerry will report its second-quarter results on Friday. Analysts project sales of US$3.03 billion, up about 5.5 per cent from a year earlier but down 1.3 per cent from the prior quarter.