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		SEC Comment Letter July 2014

July 11, 2014

BY ELECTRONIC SUBMISSION

Larry Spirgel, Esq.

Assistant Director

Division of Corporation Finance

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Subject:

 BlackBerry Limited

Form 40-F for the Fiscal Year Ended March 1, 2014

Filed March 28, 2014

File No. 000-29898

Dear Mr. Spirgel:

This letter is in response to the comment letter, dated June 20, 2014 (the “Letter”), from the staff (the “Staff”) of the Division of Corporation Finance of the Securities and Exchange Commission (the “Commission”) to Mr. James Yersh, Chief Financial Officer of BlackBerry Limited (the “Company”). The Company’s responses to the Letter set forth below are keyed to the sequential numbering of the comments and the headings used in the Letter.

COMMENT:

Form 40-F for the Fiscal Year Ended March 1, 2014

Exhibit 1.2

Financial Statements

Consolidated Statements of Operations

1.

 We note that your hardware and other cost of sales included $782 million inventory write-down of your Blackberry Z10 devices and supply commitments and $1.6 billion inventory write-down of your Blackberry 10 devices. Please tell us why such write-downs were not separately presented on the face of the financial statement pursuant to ASC 330-10-50-2 and ASC 330-10-50-5.

Response:

The Company notes the following accounting guidance as referenced in the Staff’s comment:

Losses from application of lower of cost or market

ASC 330-10-50-2: When substantial and unusual losses result from the application of the rule of lower of cost or market it will frequently be desirable to disclose the amount of the loss in the income statement as a charge separately identified from the consumed inventory costs described as cost of goods sold.

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Losses on firm purchase commitments

ASC 330-10-50-5: The amounts of net losses on firm purchase commitments accrued under paragraph 330-10-35-17 shall be disclosed separately in the income statement.

For the year ended March 1, 2014 (“Fiscal 2014”), the Company did not present the charges taken against inventory and supply commitments as separate line items on its Consolidated Statements of Operations as it believed that adequate disclosure related to the charges had been provided in the notes (the “Notes”) to the consolidated financial statements for Fiscal 2014 (the “Consolidated Financial Statements”) and Management’s Discussion and Analysis of Financial Condition and Results of Operations for Fiscal 2014 (the “Annual MD&A”). Specifically, the following disclosures were included in the Company’s 40-F:

1)

 In the “Inventories” section of Note 5 to the Consolidated Financial Statements, the Company disclosed the Fiscal 2014 charges incurred against inventory (approximately $1.6 billion) and supply commitments (approximately $782 million);

2)

 In the “Critical Accounting Estimates - Inventory and Inventory Purchase Commitments” section of Note 1 to the Consolidated Financial Statements, the Company disclosed the areas of judgment applied to the valuation of inventory, discussed the nature of the charges incurred against inventory and supply commitments, and provided details on the internal and external factors and assumptions used by management in its assessment. The relevant excerpt is included below:

“The Company’s policy for the valuation of inventory, including the determination of obsolete or excess inventory, requires management to estimate the future demand for the Company’s products. Inventory purchases and purchase commitments are based upon such forecasts of future demand and scheduled rollout and life cycles of new products. The business environment in which the Company operates is subject to rapid changes in technology and customer demand. The Company performs an assessment of inventory during each reporting period, which includes a review of, among other factors, demand requirements, component part purchase commitments of the Company and certain key suppliers, product life cycle and development plans, component cost trends, product pricing and quality issues. If customer demand subsequently differs from the Company’s forecasts, requirements for inventory write-offs that differ from the Company’s estimates could become necessary. If management believes that demand no longer allows the Company to sell inventories above cost or at all, such inventory is written down to net realizable value or excess inventory is written off.

During fiscal 2014, the Company shipped devices to its carrier and distributor partners to support new and continuing product launches and meet expected levels of end customer demand. However, the sell-through levels for BlackBerry 10 smartphones decreased significantly during fiscal 2014 due to the maturing smartphone market, very intense competition and, the Company believes, the uncertainty created by the Company's recently completed strategic review process. These factors caused the number of BlackBerry 10 devices in the channel to increase above the Company's expectations, which in turn caused the Company to reassess and revise its future demand assumptions for finished products, semi-finished goods and raw materials. The Company also made the decision to cancel plans to launch two devices to mitigate the identified inventory risk. Based on these revised demand assumptions, the Company recorded primarily non-cash, pre-tax charges against inventory and supply commitments of approximately $2.4 billion in fiscal 2014 related to Blackberry 10 devices.”

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3)

 In the “Overview - Inventory Charges” section of the Annual MD&A, the Company provided similar details of the charges as provided in the Notes, added expanded disclosure related to the significant judgments used by management in its assessment, and disclosed the location of the charges on the Consolidated Statements of Operations. The relevant excerpt is included below:

“During fiscal 2014, the Company shipped devices to its carrier and distributor partners to support new and continuing product launches and meet expected levels of end customer demand. However, the sell-through levels for BlackBerry 10 smartphones decreased significantly during fiscal 2014 due to the maturing smartphone market, very intense competition and, the Company believes, the uncertainty created by the Company's recently completed strategic review process. These factors caused the number of BlackBerry 10 devices in the channel to increase above the Company's expectations, which in turn caused the Company to reassess and revise its future demand assumptions for finished products, semi-finished goods and raw materials. The Company also made the decision to cancel plans to launch two devices to mitigate the identified inventory risk. Based on these revised demand assumptions, the Company recorded primarily non-cash, pre-tax charges against inventory and supply commitments of approximately $934 million ($666 million after tax, or $1.27 per share diluted), which was primarily attributable to BlackBerry Z10 devices (the “Z10 Inventory Charge”) in the second quarter of fiscal 2014, and approximately $1.6 billion ($1.3 billion after tax, or $2.56 per share diluted), which was primarily attributable to BlackBerry 10 devices (the “Q3 Fiscal 2014 Inventory Charge”) in the third quarter of fiscal 2014. The Z10 Inventory Charge and the Q3 Fiscal 2014 Inventory Charge were subsequently adjusted in the fourth quarter of fiscal 2014 to reflect increased sell through rates, relative to the estimates and assumptions previously considered, resulting from discounted pricing and revised orders on hand for devices and components of BlackBerry 10 products, resulting in a reduction of the original charges incurred of approximately $149 million ($106 million after tax, or $0.20 per share diluted), which was recorded as a reduction of cost of goods sold in the fourth quarter of fiscal 2014 (the “Q4 Fiscal 2014 Inventory Recovery”).”

4)

 In the “Accounting Policies and Critical Accounting Estimates - Critical Accounting Estimates - Inventory and Inventory Purchase Commitments” section of the Annual MD&A, the Company provided similar details of the charges as provided in the Notes and “Overview - Inventory Charges” section of the Annual MD&A. The relevant excerpt is included below:

“The Company’s policy for the valuation of inventory, including the determination of obsolete or excess inventory, requires management to estimate the future demand for the Company’s products. Inventory purchases and purchase commitments are based upon such forecasts of future demand and scheduled rollout and life cycles of new products. The business environment in which the Company operates is subject to rapid changes in technology and customer demand. The Company performs an assessment of inventory during each reporting period, which includes a review of, among other factors, demand requirements, component part purchase commitments of the Company and certain key suppliers, product life cycle and development plans, component cost trends, product pricing and quality issues. If customer demand subsequently differs from the Company’s forecasts, requirements for inventory write-offs that differ from the Company’s estimates could become necessary. If management believes that demand no longer allows the Company to sell inventories above cost or at all, such inventory is written down to net realizable value or excess inventory is written off.

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Significant judgment was required in calculating the inventory charges, which involved forecasting future demand and the associated pricing at which the Company can realize the carrying value of its inventory. Further, the Company’s expectations with respect to its inventory and asset risk (including its ability to sell its inventory of BlackBerry 10 products and manage its purchase obligations with its manufacturing partners) and the potential for additional charges related to inventory are forward-looking statements that are subject to the inherent risk of forecasting the Company’s financial results and performance for future periods, particularly over longer periods, given the rapid technological changes, evolving industry standards, intense competition and short product life cycles that characterize the wireless communications industry. As noted above, these difficulties in forecasting the Company's financial results and performance are magnified at the present time given the uncertainties related to the Company's operational restructuring, recent management changes and the strategic initiatives described in this MD&A.”

“In fiscal 2014, the Company recorded the Z10 Inventory Charge, the Q3 Fiscal 2014 Inventory Charge and the Q4 Fiscal 2014 Inventory Recovery. See “Non-GAAP Financial Measures” and “Overview - Inventory Charges”.”

Given the nature and the content of the disclosures above, the Company believes that it has provided adequate disclosure to inform readers of the nature and the amount of the charges taken against inventory and supply commitments in the Notes and Annual MD&A, as noted above, as well as the judgments applied by management in calculating the amounts.  While ASC 330-10-50-2 states that “it will frequently be desirable to disclose the amount of the loss in the income statement”, the Company chose to present the amount of the lower of cost or market loss in the Notes instead of on the face of the income statement. Further, in relation to ASC 330-10-50-5, which states that “the amounts of net losses on firm purchase commitments accrued ... shall be disclosed separately in the income statement”, the Company believed that it would be adequate and beneficial to readers to disclose the loss against supply commitments in the same location as the disclosure of the lower of cost or market loss in the Notes.

As a result, the Company believed that disclosing this information in the Notes would not result in a material difference to readers compared to presenting it on the face of the income statement.

However, in response to the Staff’s comment, beginning with the second quarter of fiscal 2015 (“Q2 Fiscal 2015”), the Company intends to present current and comparative period charges incurred against inventory and supply commitments, if material, in parentheses next to “cost of sales, hardware and other” on its Consolidated Statements of Operations.  An example presentation is below, which is consistent with the Company's presentation of a similar inventory provision on its Consolidated Statement of Operations for the year ended March 3, 2012.

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Consolidated Statements of Operations

Cost of Sales

Hardware and other (includes charges against inventory of $xx million and supply commitments of $xx million; August 31, 2014 charges against inventory of $627 million and supply commitments of $307 million)

COMMENT:

Form 40-F for the Fiscal Year Ended March 1, 2014

Exhibit 1.2

Financial Statements

Note 1. Critical Accounting Estimates

Revenue Recognition, page 10

2.

 Please refer to the last sentence. Tell us in detail why the revenues from your Blackberry 10 and 7 devices in certain regions are recognized when such devices sell-through to the end customers. It appears you are referring to hardware products revenues with price protection provisions. If so, the disclosure should be clarified to inform an investor that you are referring to the price protection provisions previously disclosed. In addition, tell us why this revenue recognition policy is limited to certain regions. If you expect this trend to significantly impact your future financial condition and results of operations, please provide a discussion of such impact in your MD&A.

Response:

BlackBerry 10 Revenue Recognition

In the second quarter of Fiscal 2014 (“Q2 Fiscal 2014”), following the launch of the Company’s BlackBerry 10 devices, the Company experienced significant pricing pressures from carrier and distributor partners that impacted the Company’s ability to make reliable and accurate estimates of possible future refunds for sales incentives, which impacted its ability to recognize revenue at the time of device shipment.  The Company applies judgment and evaluates whether the risk of future concessions is material and determines whether revenue should be recognized upon shipment of BlackBerry 10 devices or upon sell-through of the products to end users on a customer-by-customer basis, based on internal factors such as the commercial terms and conditions within its Master Supply Agreements (“MSAs”), the Company’s past history of providing incentives or concessions outside of those within its contracts or agreements, as well as the level of inventories in the channel.  The Company also considers external factors such as the Company’s competitive landscape, product acceptance in the market, and other economic trends.

The following developments occurred in Q2 Fiscal 2014 that resulted in the Company no longer being able to recognize revenue on BlackBerry 10 devices as they sold into the channel:

•

 Significant decreases in sell-through rates and end customer demand.

•

 Continued relatively low net promoter score results and increased return rates to the Company’s channel partners.1

•

 Increases in outstanding accounts receivable balances, as well as the percentage of receivables overdue from carrier and distributor partners.

•

 Increases in channel partner inventory positions.

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•

 Efforts to increase sell-through rates with the use of marketing and promotional programs did not increase sell-through rates, making it more likely that price concessions in the future would be required to reduce channel inventory levels.

•

 Although BES 10.1, the Company’s mobile device administration platform for BlackBerry 10 devices officially launched at BlackBerry Live on May 15th 2013, carriers were slow to test and promote the enterprise software