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BlackBerry (NASDAQ:BBRY, TSE:BB) reports in its third quarter earnings report that two low-end handsets, due for release in the emerging market, were cancelled due to lack of demand as well as a new agreement where Foxconn, the Chinese iPhone manufacturer, will take over production of the company's handsets. BlackBerry

Sales of BlackBerry (NASDAQ:BBRY,TSE:BB) handsets were so bad that the company was forced to cancel two budget phones aimed for release in emerging markets, according to its third-quarter earnings report. BlackBerry did not report on when the phones were intended for release.

BlackBerry has outsourced the production of low-end handsets to China’s Foxconn plant, and in doing so, canceled the release of the two models, codenamed Café and Kopi. In BlackBerry’s third quarter, losses totaled more than $4.4 billion. The company formerly known as RIM saw handset sales drop to 1.9 million in the past quarter, compared to 6.9 million in the same period last year.

BlackBerry was forced to write off more than $1.6 billion in unsold inventory in its third quarter. The company said in its earnings report that it canceled “plans to launch two devices to mitigate the identified inventory risk” and stem the losses from any further hardware write-offs.

The Wall Street Journal reports that BlackBerry is still working toward two high-end smartphones, code-named Ontario and Windermere. There is no release date set for BlackBerry’s secret flagship devices, and the earnings report does not mention any features or specifications.

CEO John Chen has said that BlackBerry would try to eventually have Foxconn take over all of its hardware production, as the company transitions to focus on software and services. The report mentions that the Waterloo, Ontario-based company’s BlackBerry Messenger (BBM) app for Android and iPhone now has more than 40 million active users. The app still has an uphill battle, as cross-platform messaging competitors like WhatsApp have upward of 400 million active users.

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