From CBC News

Smartphone maker will cut 4,500 jobs, predicts 2nd quarter loss of $950M

 

BlackBerry says it will cut 4,500 jobs across its operations, and expects to report a second-quarter loss of between $950 million to $995 million US when it issues its financial results next week.

 

After a brief trading halt, shares in the troubled smartphone maker tumbled 16 per cent, or $1.74, to close at $9.08 on the Toronto Stock Exchange, close to its 52-week low of $6.10.

 

The Waterloo, Ont-based company aims to cut its operating costs in half by the end of the first quarter of 2015, the company said in a statement.

 

‘This is the beginning of the end.’ —Analyst Felix Salmon

 

That will involve restructuring and a streamlined smartphone portfolio consisting of just four products – two high-end devices and two entry-level devices aimed at professional users.

 

Once a leader in the smartphone market, BlackBerry expects to report sales of 3.7 million phones in the quarter. That compares with Samsung’s 71.3 million phones and Apple’s 31.9 million phones in the same quarter.

 

The company confirmed the poor performance of the Z10 devices released earlier this year, saying it expects a “non-cash, pre-tax charge against inventory and supply commitments in the second quarter of approximately $930 million to $960 million, which is primarily attributable to BlackBerry Z10 devices.”

 

The Z10 smartphones were well-received by critics but have sold poorly in many of BlackBerry’s key markets, including the U.S.

 

The company had anticipated an operating loss in the second quarter, but the adjusted net loss is much higher than anticipated at 51 cents a share, three times the expected loss of 16 cents

 

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​BlackBerry said it will re-tier the Z10 smartphone to make it available to a broader, entry-level audience and develop the next Z30 as a high-tier smartphone.

 

BlackBerry president Thorsten Heins said the announced changes were “difficult, but necessary.”

 

“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. This puts us squarely on target with the customers that helped build BlackBerry into the leading brand today for enterprise security, manageability and reliability,” he said.

 

The nearly $1-billion writedown of inventory is a move calculated to attract a buyer for the troubled company which signalled in August it might be looking for a buyer.

BlackBerry’s Z10 was well-received by critics but has sold poorly in key markets including the U.S. (CBC)

 

BGC analyst Colin Gillis in New York said the company might be more interesting to a prospective buyer, now that that it has announced the restructuring. Gillis thinks it’s possible BlackBerry could survive as a much smaller player. At the end of the second quarter, the company had total cash and investments of about $2.6 billion and no debt.

 

“That’s probably the feedback they’ve been getting. They don’t do all this if you have a buyer lined up,” Gillis said.

 

“Some of the actions may have been driven by feedback by potential buyers down the road. Nobody wants to come in and buy the company and hold an all hands meeting and say, ‘By the way, half of you are fired.’”

 

Massive cuts to the hardware business, where BlackBerry has lost market share to Samsung and Apple, could help the firm refocus on its well-regarded messaging software.

 

Serious decline

 

At their peak in the fall of 2009, BlackBerry’s smartphones enjoyed global market share of over 20 per cent, says Mike Walkley, an analyst with Canaccord Genuity. Their piece of the pie has since evaporated to just 1.5 per cent.

 

The company, once called Research in Motion, laid off 5,000 employees last year.

 

BlackBerry has lost the smartphone wars and is now “toast” said Felix Salmon, who writes a financial blog for Reuters, in an interview with CBC’s Lang & O’Leary Exchange.

 

“I would say than losing $1 billion would count in most people’s books as serious decline, not to mention 4,500 [layoffs]. You can’t cut your way to growth, you can cut your way to adoption,” he said.

 

Salmon doesn’t believe the company will find a buyer under these conditions.

 

“Who would want to throw good money after bad?” he said. “There’s a breakup value to the company, but as a going concern, I believe this is the beginning of the end of people walking around with BlackBerrys in their pocket.”

 

For more on this story go to:

http://www.cbc.ca/news/business/blackberry-shares-sink-amid-layoffs-expected-1b-loss-1.1862420

Related story:

Digicel launches the new youthful and fun Blackberry 10 Qwerty Smartphone, The Blackberry Q5, in the Caribbean and Panama

 

George Town, Grand Cayman: Digicel yesterday announced the new BlackBerry® Q5 smartphone is now available in the Caribbean and Panama. The BlackBerry Q5 smartphone features a QWERTY keyboard in a stunning youthful design and comes pre-loaded with the new BlackBerry® 10 OS version 10.1 software. Every feature, every part of the BlackBerry Q5 smartphone has been built to provide a fast, effortless experience that flows and moves with you to help you explore, create, and share while on the move go.

 

Digicel Group Commercial Director, Brian Finn, said, “Digicel is all about delivering style and value to its customers across the region and with the introduction of the BlackBerry Q5, we’re doing just that. The stylish handset boasts many of the great features of the BlackBerry Z10 and BlackBerry Q10 smartphones at a very affordable price from Digicel.”

 

As part of the BlackBerry 10 experience, the new BlackBerry Q5 smartphone offers a powerful and unique mobile computing experience that continuously adapts to your needs. Features and apps work seamlessly together, allowing your every move to flow into the next. Highlights of the BlackBerry Q5 include the BlackBerry® Hub, which lets you stay close to what’s important to you without stopping what you’re working on. The camera Time Shift mode helps you create the perfect shot every time, and with BBM™ Video with Screen Share, you can instantly switch your BBM chat to a BBM Video conversation and catch up face-to-face. Visit the BlackBerry® World™ storefront and discover the more than 120,000 apps available to you.

 

Pricing and Availability

 

The new BlackBerry Q5 smartphone is available online and in Digicel stores in the Caribbean and Panama from $299KYD Postpaid and $399KYD Prepaid. The BlackBerry Q5 smartphone will also be available in Digicel El Salvador stores from mid-October. For more information on Digicel products and services, visit www.digicelgroup.com

 

For more information on BlackBerry 10, please visit www.blackberry.com/blackberry10

 

See also related iNews Cayman stories:

 

“Univision upgrades entire mobile fleet with 2,000 BlackBerry Q10 Smartphones” published August 28 2013 at: http://www.ieyenews.com/2013/08/univision-upgrades-entire-mobile-fleet-with-2000-blackberry-q10-smartphones/

 

“The New BlackBerry Q5 Smartphone Launches in the Caribbean” published August 21 2013 at: http://www.ieyenews.com/2013/08/the-new-blackberry-q5-smartphone-launches-in-the-caribbean/

 

“Why now is a good time to buy BlackBerry” published May 8 2013 at: http://www.ieyenews.com/2013/05/why-now-is-a-good-time-to-buy-blackberry/