BlackBerry has revealed plans to retreat from the consumer market and to lay off 4500 workers, or 40pc of the total, as it was revealed it would post a whopping $950 million quarterly loss.
The company said it had experienced a 40 percent plunge in sales. sending its result down the gurgler.
BlackBerry surprised Wall Street by releasing its second quarter earnings on Friday, with the Canadian smartphone maker warning the market that it expects to post revenues for the quarter of around US$1.6 billion when it files its formal earnings report on September 27 – barely half the $3.06 billion that analysts were expecting.
BlackBerry’s latest handsets just aren’t selling: the company reportedly shipped around 3.7 million phones in the quarter, half of the 6.8 million total shipped in the first quarter and half as many as it moved in the previous year’s Q2.
Many of those shipped in fact are said to be lying unsold in distributors and retailers’ warehouses.
BlackBerry said it will take immediate steps to put the brakes on its losses, even as its share price fell off a cliff.
Trading of the struggling Canadian smartphone manufacturer’s stock plummeted 21 percent to C$8.50 in Toronto. In New York, BlackBerry was down 20 percent to US$8.73.
Apart from the 4500 layoffs, MarketWatch reports that BlackBerry also plans to tighten the focus of its future products to concentrate on the enterprise and “prosumer” markets. Instead of the six handsets it originally had planned to run under its Blackberry 10 OS, it will now produce only four, including two high-end models and two entry-level units.
Over the long term, this latest devastating news seems sure to further fuel suggestions that BlackBerry is an acquisition target. Microsoft is widely thought to be circling the struggling Canadian firm, having already snapped up Nokia for what many saw as a bargain price.
Both the New York Times and Wall Street Journal have reported that BlackBerry co-founder and former CEO exec Mike Lazaridis has approached private equity firms about making a bid for the company. The NYT says he’s reached out to the Blackstone and Carlyle groups about putting together an offer.
Lazaridis stepped down in January 2012. along with fellow co-CEO Jim Balsillie, and eventually left the company altogether in March. But he remains one of the largest individual shareholders, a position that could help him if he decides to move forward with a potential bid to take BlackBerry private.
