BlackBerry warns of big loss, to cut 4,500 jobs

Posted by African Examiner Business News, Technology Saturday, September 21st, 2013

BlackBerry Ltd warned on Friday it expects to report a huge quarterly operating loss next week and that it will cut more than a third of its global workforce, rekindling fears of the company’s demise and sending its shares into a tailspin.

The company, which has struggled to claw back market share from the likes of Apple Inc’s iPhone and Samsung Electronics Co Ltd’s Galaxy phones, said it expects to report a net operating loss of between $950 million and $995 million in the quarter ended August 31, due to writedowns and other factors.

The results will put more pressure on BlackBerry to find a buyer for either some parts of the company, or for all of it. It said last month it is weighing its options, including an outright sale, in the face of persistently lackluster sales of its new smartphones, which run on the BlackBerry 10 operating system.

“The company has sailed off a cliff,” said BGC Partners analyst Colin Gillis. “What do you expect when you announce you’re up for sale? Who wants to commit to a platform that could possibly be shut down?”

BlackBerry’s Toronto-listed shares fell as much as 23.7 percent to C$8.25 on Friday, their lowest this year, before closing down 16 percent at C$9.08. The company’s Nasdaq-listed shares ended 17 percent lower at $8.73, after falling as low as $8.01.

Waterloo, Ontario-based BlackBerry, once Canada’s premier technology company, said it expects to book a $930 million to $960 million writedown in its fiscal second quarter owing to a ballooning stockpile of unsold BlackBerry Z10 devices.

The company had bet much of its future on the popularity of the Z10 touchscreen device – the first of the smartphones to be powered by its new BlackBerry 10 operating system. While the device drew favorable reviews, it has failed to gain traction among consumers since its introduction earlier this year.

For the second quarter, the company expects to have sold about 3.7 million BlackBerry smartphones to end users. BlackBerry said it is changing the way it accounts for device sales, now booking revenue only after a device is sold to the end-customer, and not to carriers.

Worryingly, most of the unit sales being recognized in the quarter are older-generation BlackBerry 7 devices. The company said it could not recognize BlackBerry 10 devices shipped in the quarter until those devices are sold through to end customers. That suggests carriers have been having difficulty moving the new line of devices.

Reuters