More reports on: Telecom
BlackBerry to post nearly $1 bn Q2 loss, cut 4,500 jobs news
21 September 2013

Canadian smartphone maker BlackBerry yesterday announced that it would eliminate 4,500 employees and expects to post a quarterly loss of nearly $1 billion.

BlackBerryThe devastating news comes as thousands of  people queue up to buy Apple's brand new iPhone.

The bad news does not end for Blackberry, whose device were once the symbol of status, as the Ontario-based company is left holding nearly $1 billion worth of unsold smartphones.

It said that it would take an inventory charge of as much as $960 million. The inventory charge is mostly for its Z10 touch-screen device, which the company had promoted as its flagship model and and a potential competitor to the iPhone.

Blackberry, which recently changed its name from Research In Motion, said that it expects to report sales of around 3.7 million smartphones in the second quarter and revenue of about $1.6 billion, which is far below the $3 billion estimated by Wall Street.

The company warned that it would post a net operating loss of between $950 million and $995 million for the quarter, which includes the as much as $960 million inventory charge and a restructuring charge of $72 million.

It said it shipped 3.7 million smartphones last quarter, compare that figure  to the  six million new iPhone that Apple expects to sell just this weekend.

Most of the 3.7 million smartphones sales were of the company's older devices and not its new lineup of BlackBerry 10 phones.

Blackberry also announced that it is targeting an approximate 50-per cent reduction in operating expenditures by the end of the first quarter of Fiscal 2015. 

As part of this, the company will reduce its headcount  by approximately 4,500 workers or approximately 40 per cent of the company's global workforce of around 11,700.

BlackBerry will also trim its smartphone portfolio from 6 devices to 4, focusing on enterprise and professional consumer-centric devices, including 2 high-end devices and 2 entry-level devices.

Thorsten Heins, president and CEO of BlackBerry said, ''We are implementing the difficult, but necessary operational changes announced today to address our position in a maturing and more competitive industry, and to drive the company toward profitability.

"Going forward, we plan to refocus our offering on our end-to-end solution of hardware, software and services for enterprises and the productive, professional end user.''

The company, which once dominated the smartphone market, is now looking at strategic alternatives, including selling itself.

According to commentators, BlackBerry would find it hard to come up with a buyer and the funding to go private. With the company's bottom line in the red and subscribers deserting, private equity firms and other buyers might not want to step in.

The company's shares have plunged over 19 per cent this year, and its market value down to $4.8 billion, from its 2008 peak of $84 billion.

BlackBerry's openness to consider a deal comes as a radical shift in thinking for the company.

Till recently, BlackBerry, a pioneer in providing secured emails on handheld devices, had firmly pushed for staying independent, pinning its hopes on a turnaround for its latest smart phones.

The question is not whether Blackberry's days are numbered in the smartphone business, but will it find a buyer like how Motorola and Nokia did.

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BlackBerry to post nearly $1 bn Q2 loss, cut 4,500 jobs