Tuesday, September 24, 2013

Global Impact: Toronto-Based BlackBerry to Lay Off 4,500 Employees, Reports Losses of $1B

According to The Latin American Tribune, Toronto-based smartphone manufacturer BlackBerry said it would lay off 4,500 employees, or more than a third of its workforce, and warned of a third-quarter net operating loss of up to $C995 million.

The company’s shares plunged Friday (September 20) after the announcement and closed down more than 17% at $8.73 a share on the NASDAQ.

The layoffs are part of BlackBerry’s goal of reducing its operating expenditures by the end of the first quarter of fiscal year 2015 by approximately 50%, the company said Friday in a financial release.

The Canadian company also said it expected to post $1.6 billion of revenue in the second quarter of the current fiscal year, which ends in March 2014, after selling approximately 3.7 million smartphones during that period.

COMMENT: BlackBerry acknowledged poor sales results for the new model of smartphones on which it had bet its future success.

The company also announced a change in its business strategy, saying that it planned to “refocus our offering on our end-to-end solution of hardware, software and services for enterprises and the productive, professional end user.”

“We are implementing the difficult, but necessary operational changes announced today to address our position in a maturing and more competitive industry, and to drive the company toward profitability,” BlackBerry President and CEO Thorsten Heins was quoted as saying in the release.