BlackBerry to cut 4,500 jobs, expects bleak quarterly results
BlackBerry (NASDAQ:BBRY) said it will cut 4,500 jobs, or 40 percent of its workforce, and previewed extremely weak quarterly results ahead of its next earnings announcement, which is due Sept. 27.
The company said it is targeting around a 50 percent reduction in operating expenditures by the end of the first quarter of fiscal 2015. After the cuts BlackBerry said it will have 7,000 full-time global employees.
BlackBerry said it expects to report a net operating loss for its second fiscal quarter of between $950 million and $995 million. Perhaps even more worrisome: The company said the loss includes a primarily non-cash, pre-tax inventory charge of $930 million to $960 million "resulting from the increasingly competitive business environment impacting BlackBerry smartphone volumes." The inventory charge likely means BlackBerry has not been selling nearly as many smartphones running its BlackBerry 10 platform as it needs to generate a turnaround.
BlackBerry said it expects to report revenue for its fiscal second quarter, which ended Aug. 31, of around $1.6 billion on sales of 3.7 million smartphones. That's around half the $3.1 billion and 6.8 million smartphones the company notched in its fiscal first quarter.
"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," the company said in a statement. "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."
Interestingly, the company announced plans to transition its future smartphone portfolio from six devices to four. The portfolio will focus on enterprise and "prosumer-centric" targeted devices, including two high-end devices and two entry-level devices in all-touch and Qwerty-keyboard models. The newly announced 5-inch touchscreen BlackBerry Z30 will push the touchscreen will re-tier the touchscreen BlackBerry Z10 down in price "to make it available to a broader, entry-level audience." The shift likely indicates BlackBerry has largely given up on the core consumer smartphone market.
The company said the special committee of its board continues to evaluate its strategic options, which include a possible sale of the company. Recently the Wall Street Journal reported that BlackBerry is hoping to wrap up a sales process by November. A handful of private equity firms and other potential bidders are circling BlackBerry, but interest is tepid and some buyers are expressing interest in parts of its business rather than the whole company, Reuters recently reported
"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," BlackBerry CEO Thorsten Heins said in a statement. "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."
- see this release
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