Saturday, September 21, 2013

Blackberry cuts 4500 jobs...The End is in Sight

 
BlackBerry's grim outlook   
 
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. 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 

​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 write-down of inventory is a move calculated to attract a buyer for the troubled company which signaled in August it might be looking for a buyer.
 
 
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BlackBerry's Z10 was well-received by critics but has sold poorly in key markets including the U.S. 
 
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.
"I believe this is the beginning of the end of people walking around with BlackBerrys in their pocket.”
 
How is the city of Waterloo (Home of Blackberry)  responding to the demise of the company?? Watch video.
 


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