News Column

BlackBerry Announces Huge Loss, Massive Layoff

September 23, 2013

Global Data Point

thorsten heins blackberry
Thorsten Heins, BlackBerry president and CEO (file photo)

BlackBerry has issued a trading update and is warning that it expects to post a loss of around US$1 billion for the second financial quarter of the year.

The company is also confirming rumours of massive redundancies, and is cutting approximately 4,500 employees -- which accounts for about 40% of the workforce.

The firm also said that it would cut its product range from 6 smartphones to four, focusing on enterprise and prosumer-centric devices, including 2 high-end devices and 2 entry-level devices.

Financially, the company expects to post a net operating loss of approximately $950 million to $995 million; loss includes a primarily non-cash, pre-tax inventory charge of approximately $930 million to $960 million resulting from the increasingly competitive business environment impacting BlackBerry smartphone volumes, and a pre-tax restructuring charge of $72 million.

Thorsten Heins, President and Chief Executive Officer 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 special committee set up by the board of directors to look for a long future for the company continues to evaluate strategic alternatives. At the end of the second quarter, total cash, cash equivalents and investments is estimated to be approximately $2.6 billion. The company has no debt.

The company currently expects to report revenue for the second quarter of approximately $1.6 billion, of which approximately 50% is expected to be service revenue.

For the second quarter, the company expects to recognize hardware revenue on approximately 3.7 million BlackBerry smartphones. Most of the units recognized are BlackBerry 7 devices, in part because certain BlackBerry 10 devices that were shipped in the quarter will not be recognized until those devices are sold through to end customers. During the second 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 channel.

Now that the company has launched its Z30 smartphone, it said it would "re-tier" the Z10 to make it available to a wider audience, which is probably code for "price cuts". No details about how they will "re-tier" the older phone were available in the company statement.

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Original headline: BlackBerry Announces $1 Billion Loss and Cuts 4,500 Jobs


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Source: (c) 2013 Global Data Point. All Rights Reserved.