4,500 jobs to go as Blackberry announces $1bn loss

Canadian device vendor Blackberry has said that it expects to make a loss of between $950m and $995m during its second fiscal quarter. In addition, the firm has announced restructuring plans that will see it cut staff numbers by approximately 4,500 – equivalent to 40 per cent of its global workforce.

The firm said that intense competition it has faced in the hardware market will cause it to report a “primarily non-cash, pre-tax charge against inventory and supply commitments” in the second quarter of approximately $930m to $960m, which is primarily attributable to BlackBerry Z10 devices. It added that it will also face a pre-tax restructuring charge of $72m.

BlackBerry also announced plans to scale down its future smartphone portfolio from six devices to four, adding that the portfolio will focus on devices targeted at the enterprise and “prosumer” segments.  The firm plans to offer two high-end devices and two entry-level devices in both “all-touch” and QWERTY models.

It currently expects to report revenue for 2Q13 of approximately $1.6bn, of which roughly half is expected to be service revenue. During this period it expects to sell around 3.7 million BlackBerry smartphones, although it admitted that most of these units will be BlackBerry 7 devices.

The firm added that with the launch of the BlackBerry Z30 – its upcoming high-end BlackBerry 10 smartphone – it will “re-tier” the BlackBerry Z10 smartphone “to make it available to a broader, entry-level audience”.

The firm also revealed it is targeting an approximate 50 per cent reduction in operating expenditures by the end of 1Q15; which is why it is reducing its workforce by 40 per cent.

Thorsten Heins, president and CEO of BlackBerry called the changes “difficult, but necessary operational changes to address our position in a maturing and more competitive industry and to drive the company toward profitability”.

“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.”

The firm added that the Special Committee of the company’s Board of Directors continues to evaluate all strategic alternatives for the firm.