BlackBerry warns of big loss, 4,500 job cuts
TORONTO — BlackBerry warned yesterday (Sept 20) that 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’s iPhone and Samsung Electronics’s Galaxy phones, said it expects to report a net operating loss of between US$950 million (S$1.2 billion) 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. It said last month it is weighing its options, including an outright sale, in the face of persistently lacklustre sales of its new smartphones, which run on the BlackBerry 10 operating system.
“The company has sailed off a cliff,” said BGC Partners analyst Colin Gillis. “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?”
BlackBerry’s Toronto-listed shares fell as much as 23.7 per cent to CUS$8.25 yesterday, their lowest this year, before closing down 16 per cent at CUS$9.08. The company’s Nasdaq-listed shares ended 17 per cent lower at US$8.73, after falling as low as US$8.01.
The company said it plans to shave its operating costs by some 50 per cent over the next nine months, as it aims to focus its attention on the enterprise market and become a more niche player. But some analysts are sceptical 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,” said UBS analyst Amitabh Passi.
A source at a potential suitor said the warning yesterday 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,” said the source.
The Wall Street Journal, citing unnamed sources, yesterday said the company’s former head Mike Lazaridis has been talking with private-equity firms about possibly mounting a joint bid for the struggling smartphone maker.