BlackBerry to cut 4,500 jobs as losses mount

Mobile phone maker BlackBerry has warned it expects to report a huge quarterly operating loss next week and that it will cut some 4,500 jobs, a third of its global workforce.

The overnight news rekindled fears of the company’s demise and sent its shares into a tailspin.

BlackBerry, which has struggled to claw back market share from the likes of Apple iPhone and Samsung’s Galaxy range, said it expects to report a net operating loss of between $950 million and $995 million for the quarter ended August 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 lackluster 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 C$8.25 on yesterday, their lowest this year, before closing down 16 per cent at C$9.08.

The company’s Nasdaq-listed shares ended 17 per cent lower at $8.73, after falling as low as $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.

The Wall Street Journal, citing unnamed sources, 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.

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

BlackBerry, once Canada’s premier technology company, said it expects to book a $930 million to $960 million writedown in its fiscal second quarter owing to a ballooning stockpile of unsold BlackBerry Z10 devices.

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 last 12 months.

It employed 12,700 people as of March, and once had close to 20,000 employees. BlackBerry said its cash position as of the end of the fiscal second quarter is estimated to be about $2.6 billion, down from about $3.1 billion three months earlier.

Bloomberg