BlackBerry confirms 4,500 jobs cuts, slashes device portfolio

BlackBerry confirms 4,500 jobs cuts, slashes device portfolio

Summary: BlackBerry shares were halted on the Nasdaq stock exchange on Friday afternoon, ahead of news of massive job cuts.

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TOPICS: BlackBerry
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BlackBerry chief executive Thorsten Heins (Image: CNET)

BlackBerry said late Friday afternoon that it will cut 4,500 jobs as the Canadian company continues to struggle in the face of steep competition in the mobile space.

The news follows earlier reports that the company was preparing to cut as much as 40 percent of its global workforce.

The smartphone maker said it will retain approximately 7,000 full-time employees around the globe as it attempts to generate traction for its next-generation mobile operating system, BlackBerry 10, and the devices that use it.

In guidance for its second fiscal quarter 2014, BlackBerry expects to lose $950 million to $995 million, or or $1.81 to $1.90 per share. 

The reason for the massive loss is due to a pre-tax charge of between $930 million and $960 million on inventory, "which is primarily attributable to BlackBerry Z10 devices," it says.

The company aims to cut its operating expenditures by 50 percent by 2015.

BlackBerry also said it would report second quarter revenue of $1.6 billion. Wall Street was expecting $3.03 billion. The company said it expects its cash reserve to drop from its first fiscal quarter of $3.1 billion down to $2.6 billion.

For the second quarter, BlackBerry expects to sell 3.7 million BlackBerry devices. However, most of these will be older devices running its two-year-old BlackBerry 7 operating system, it admitted.

To regain traction in the marketplace, the phone maker says it will reduce its portfolio from six BlackBerry 10 devices to four as it realigns its focus on the "enterprise and prosumer market." It will offer two high-end devices and two entry-level devices; the BlackBerry Z30, which launched this week, will occupy the "high-end" tier; the troubled Z10 will be reclassified to appeal to "a broader, entry-level audience."

The only silver lining in BlackBerry's announcement? The fact that the company is seeing increasing penetration of BlackBerry Enterprise Server 10. It now has more than 25,000 commercial and test servers installed to date, compared to 19,000 in July 2013, it said.

In prepared remarks, BlackBerry chief executive Thorsten Heins said the firm was implementing "the difficult, but necessary operational changes" in a bid to drive the smartphone maker towards profitability.

He added:

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.

Last month, BlackBerry announced that it had formed a special committee to evaluate a potential sale, which could include splitting up the company and selling parts off to various parties. In a statement issued today, the company's board of directors said "continues to evaluate all strategic alternatives for the company."

Shortly before the announcement, shares of BlackBerry ($BBRY) were halted on the Nasdaq stock exchange on "pending news" reports. BlackBerry was trading at $10.27 per share, down more than 2 percent, at the time of halted trading.

Shares plummeted by more than 20 percent following the news, wiping $1 billion off the company's value.

Screen Shot 2013-09-20 at 15.51.21
(Image: Google Finance)

Topic: BlackBerry

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33 comments
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  • "continues to evaluate all strategic alternatives for the company"

    In other words, no one has expressed any interest in buying them.
    Sir Name
  • It's clear to me

    Smartphones makers need a true flagship device - Apple got it, Samsung got it, HTC went down because they stopped having it, LG became bigger with a bigger flagship, ...
    BB needs a top end device regardless of the price - design must be top notch.
    AleMartin
    • Troubled times indeed

      HTC fired %20 of staff this year, Google pretty much fired all what was left of Motorola Mobility division (+5000), Nokia 14000 the last two years. Blackberry...
      SinfoCOMAR
    • It's clear to me

      You can't disappear for 2 years while you cook up your new platform.
      greywolf7
  • Time for The Doors

    This is the end, beautiful friend
    This is the end, my only friend, the end
    Alan Smithie
    • The End

      One of my favorite Doors songs.
      Jeff Richardson
  • Bb is done

    By the end of nov there will be no more bb.
    ITGuy000
  • Slashing Jobs doesn't help it hurts more...

    When you cut jobs you cut employment you cut into several markets cause people have no money. Round robin affect here your also many times cutting your own customers as well. You pay unemployment, and more. Perhaps if most tech companies were still making Products or more here bringing back jobs and the tech we would see booms and growths that once was. No its expand take over cut jobs boost CEO's pay who gets bonus during job cuts and it never fixes the issues.

    I challenge one CEO to give their bonus to the workers invest their bonus into advertisements, bring in new ways to cut cost bring out new products and create demand and jobs. If you have to cut jobs it means most management and advertisement depts have not done their jobs but rather enjoy fancy trips and parties talk blah blah blah speeches for minutes that require 2 days travel and expenses and yet cut jobs and loose in sales.

    People fire the pathetic accountants, fire your failed leaders and start for once to get some ideas in new methods that promote growth. If you cant do that you will never survive and another buy out more jobs cut its too repetitive for almost 15 years now so wake up...
    wpreece
    • The annual salary of 4500 workers

      Based on the reported average salary at BB of 56,000 the annual total for 4500 workers would be 252 million. If the CEO forgoes his entire compensation of 9 million it would cover their salaries for 13 days. Monthly salaries would be 21 million. They have a cash flow problem... Cash going out but not enough coming in.
      greywolf7
    • Apple has 150 Billion in cash

      Apple has 150 Billion in cash and will rack up plenty more off the new iPhone... Maybe they can spare some but I doubt they are giving any away.
      greywolf7
    • Cutting jobs

      This is the "easy path" for management. It is an expense and most of the time a pretty substantial expense; hence managers who really have no clue on how to manage simply take the easy route and reduce expenses by cutting staff. They absolutely refuse to really do their jobs and look for other areas to reduce cost. Most of the time these other areas are easy to find/hard to implement, but most managers are even to lazy to find the low hanging cost cutting fruit and default almost immediately to laying off staff. Never mind that laying off most people has way more negatives then finding that other low hanging fruit, again managers have to actually WORK (sorry I promised I would use any nasty four letter words on this blog! LOL) and most people who observe from afar know and realize Managers have a distinct aversion to WORK. No, the easiest and quickest way is to just let some of those 10+ year experienced employees go. You know the people who really know the business and the systems that guide them. You know, those are the valuable employees who really "keep the lights on". Sadly, the people in charge, the people who made the stupid decisions that led to the layoffs to begin with, these are the same people who avert the real WORK and go down the "easy path", just cut staff. Stupid, but who ever said American management and for that matter global management were smart? That's an illusion, most managers that I know or who I ever had worked for are totally and completely clueless. Most either are under qualified to be in their positions or work their way up, get fat and happy, lose all their skills and become just as incompetent as those who are unqualified. All sad, but all true.
      BruinB88
  • Eli$on will buy it

    at bargain price
    The Linux Geek
    • Larry would like to have owned Finland or another country but ...

      I don't see Ellison having any interest in BlackBerry.
      greywolf7
  • They should drop the 'B'

    change their name to LackBerry, as they appear to be lacking a few things, like compelling phones and cash.
    John Zern
  • BB failure is illogical

    Since my wife started to purchase notebooks in Costco without asking me about specs, just uses her personnel perception about PC I realized that Windows is coming to its logical end.
    When people started to buy large phones instead of small compact models I realized that I don't understand contemporary market anymore and I become a regular software dinosaur.
    BB failure is illogical since they produce very nice hardware and software, but it is not cool enough. Probably they needed to forget prototype Z30 in the same coffee shop where Apple used to forget its phones? Electronics market is driven by fashion not by specs or features, all this speculations about app store and lack of applications I thing is only partially correct. I think BB has to ask some couturier for help. It is complete idiotic idea, but it explain why Apply sails declines, they interface is not cool anymore, the same buttons for last 5 years, is just too boring for consumers :-)
    Nikolayev
    • Hmmm

      Retrying false spam ... Part 1

      Part of what you said is explained by the term Game Changer and the rest is marketing. Perhaps another word for marketing is lying. It used to be little white lies... Stretching the truth a bit here or there then it became full on bald faced fabrications.

      Enter the Game Changer... Presented with the problem of, "how do I get into an established market" there we a couple of options. You can try to compete by being better, faster, etc. OR you try to Change The Game. Redefine the market to your advantage and the disadvantage of others. You can change the game through innovation or through perception. The innovation route being technically more challenging and perhaps a bit more rare. The perception route again is mostly marketing.
      greywolf7
    • Part2

      I have to admit the first time I used an iPhone I thought you have to be kidding me, this piece of shit will go nowhere. The keyboard sucks, it's harder to do everything I need to do but there are some other things you can do with it. Pffft

      There's an app for that... That was what you heard day after day... (Marketing - lies). Yep to use a web site you needed an app. The browser wasn't good enough and the screen was too small to present web sites as they were built so you needed an app. Actually the stupid iPhone is what needed the app and still does mostly although many web sites are being redesigned to work with these smaller form factors. In the end it's not really better just different... They changed the game that's all.

      Apps - as an example, yep there's an app to calculate tips, an app to calculate percentages, an app to calculate state sales tax. We used to use a calculator for all this, but were stupider now, we have to have an app to make even the simplist things brain dead easy... Sort of ... If you can remember which app your supposed to use and where it is... If you have room for it. Going to a web site? Forget the browser that doesn't work, you need an app for it. The game was changed and not for the better as far as I'm concerned. But whats the number one app and the number one app category?? games. i.e. wasting time. productivity whats that? What I want to do on my phone is 1. Talk, 2. Email, 3, send or receive a message... Preferably in email but IM is OK sometimes. All of these tasks are NOT better on an iPhone.
      greywolf7
      • There's an app for that (Part2)

        greywolf3, Whoa! You got it. I just got an iPad for one thing, and that was using facetime to communicate with my step-son in Korea. Great app BTW, except it's limited to two people. In my opinion, Skype sucks. Everything you want to do requires an app, you can't get to data unless you have dropbox, etc. No USB, access to battery, etc. I could care less about iOS7.

        I am at the point where I am searching for a new smartphone. I have used a BB Bold for over two years. It did everything I wanted until some DA decided to drop Intellisync from their desktop synching software which allowed appointments, etc. to be deleted. YIKES!

        Since I am Outlook centric, I need to synch all my devices so they work seamlessly on all those devices. That used to be true until Intellisync went down the toilet. Every solution I've seen is worse than what I've got now. I also want to be able change the battery when needed. I may need to change carriers if I can't find a good solution at my house, and if I do... this Bold won't be able to switch.
        c-bob
      • part 2

        Im with you Greywolf3 on the reason for having a mobile phone,its for communicating.
        Ive just purchased a used Blackberry 9900,its excellent and sound is crystal clear. Ive been using mobiles since the first Motorola Brick in the 80s and the 9900 does everything I want and does it well.
        Games,pah I don't have the time to waste and when I do I read a library book.

        Im amazed at the amount of money spent by average families on gadgets and technology,not just that but the fact that they regularly upgrade for no real benefit.
        Fixed overheads for mobile phones,cable tv, satellite TV broadband etc are now a big part of the cost of living
        michael@...
    • Part3

      BB was good at the essential productivity stuff but the game was changed and the perception was shifted by marketing that you "needed" something else. You NEED EYE CANDY so you can feel good about yourself. You NEED to crush the worms or the birds or whatever to boost your self esteem and you NEED to pay a premium price for it because its "better".

      Yes along the way some other cool stuff got drug along ... Maps that sometimes help you find you way and sometimes land you in the river because there really isn't a road there... :-)

      Certainly when the game changes reaction time is critical... When you take two years to build a new platform and you don't have antything new in the meantime you lose your position and become the guy on the outside looking in. Everything you had still works the same as it always did but nobody wants it because the game changed. That's how it happens in the workplace as well... You didn't lose your skills but the game changed and nobody cares.

      Game ON.
      greywolf7