BlackBerry plans job cuts

‘SAILED OFF A CLIFF’::The company expects losses of up to US$955 million. It plans to shave operating costs by 50% over the next nine months, cutting 4,500 jobs

Reuters, TORONTO

Sun, Sep 22, 2013 - Page 13

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 US$950 million and US$995 million in the quarter ended Aug. 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.

“The company has sailed off a cliff,” BGC Partners analyst Colin Gillis said. “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?”

The company said it plans to shave its operating costs by about 50 percent over the next nine months, as it aims to focus its attention on the enterprise market and become a more niche player. However, some analysts are skeptical that the company can cut its way back to prosperity.

“We believe the most likely outcome is a break-up or sale in total or in parts,” UBS analyst Amitabh Passi said.

A source at a potential suitor said the warning on Friday may speed up the sale process, but it also adds more risks.

“I think most will view it as pretty scary. It’s a melting ice cube,” the source said.

The Wall Street Journal, citing unnamed sources, on Friday said the company’s founder, Mike Lazaridis, has been talking with private-equity firms about possibly mounting a joint bid.

Lazaridis, who owns a 5.7 percent stake in the company, has reached out to private equity firms that include the Blackstone Group and Carlyle Group, the report said.

Waterloo, Ontario-based BlackBerry, once Canada’s premier technology company, said it expects to book between US$930 million and US$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.

BlackBerry expects its adjusted net loss, before giving effect to the inventory and restructuring provisions, will be in a range of between US$250 million and US$265 million, or a loss of US$0.47 to US$0.51 a share, the company said.

BlackBerry sees about US$1.6 billion of revenue in the second quarter, of which about 50 percent is expected to be revenue from its services unit.

Analysts, on average, had forecast a loss of US$0.15 a share on revenue of US$3.06 billion, according to Thomson Reuters.

“The revenue and device shipment numbers are pretty surprising given how weak it is,” Passi said. “I think many of us were expecting a pretty difficult quarter, but this is much worse than we anticipated.”

The company, which had warned that job cuts were in the offing, plans to shed 4,500 jobs. BlackBerry has already undergone a major round of job cuts over the past 12 months. It employed 12,700 people as of March and once had close to 20,000 employees.