Struggling smartphone maker BlackBerry today reported a net loss of $965 million for the second quarter ended August 31, 2013 hit hard by inventory charge related to its latest offering Z10.

The Canadian handset manufacturer had posted a net loss of $235 million for the period ended September 1, 2012, it said in a release.

BlackBerry follows February—March as fiscal year.

It also cancelled its second quarter earnings conference call and webcast due to the letter of intent agreement between BlackBerry and Fairfax Financial Holdings on a $4.7 billion offer by Prem Watsa-led firm to acquire the handset maker.

“Revenue for the second quarter of fiscal 2014 was approximately $1.6 billion, down 49 per cent from $3.1 billion in the previous quarter and down 45 per cent from $2.9 billion in the same quarter of fiscal 2013,” it added.

“We are very disappointed with our operational and financial results this quarter and have announced a series of major changes to address the competitive hardware environment and our cost structure,” BlackBerry President and CEO, Thorsten Heins said.

While the company goes through necessary changes to create the best business model for its hardware business, BlackBerry continues to see confidence from customers through increasing penetration of BES 10, where it now has more than 25,000 commercial and test servers installed to date, up from 19,000 in July 2013, he added.

In terms of revenue break-up, about 49 per cent came from the hardware business, 46 per cent for service and 5 per cent for software and other revenue.

“During the quarter, approximately 5.9 million BlackBerry smartphones were sold through to end customers, which included shipments made prior to the second quarter and which reduced the company’s inventory in the channel,” BlackBerry said.

During the second quarter, BlackBerry recognised hardware revenue on about 3.7 million BlackBerry smartphones.

Most of the units recognised are BlackBerry 7 devices, in part because certain BlackBerry 10 devices that were shipped in the second quarter of fiscal 2014 will not be recognised until they are sold through to end customers, it added.

On loss, BlackBerry said: “The GAAP loss from continuing operations for the quarter was $965 million, including a primarily non-cash, pre-tax charge against inventory and supply commitments of approximately $934 million (the Z10 Inventory Charge).”

Besides, pre-tax restructuring charges of about $72 million related to the cost optimisation and resource efficiency programme was also taken.

This compared with a loss from continuing operations of $84 million in the first quarter and a loss from continuing operations of $229 million in the same quarter last year.

The company also announced it will lay off 40 per cent of its already diminished workforce or about 4,500 people.

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