BlackBerry temporarily halted trading this afternoon to deliver some grim news. Today the company confirmed earlier reports of massive layoffs — some 4,500 employees will be let go by the end of the year. To put that in perspective, BlackBerry’s total headcount sat at 12,700 as of March 2013, so this next spate of firings means that between 35 and 40 percent of the company’s workforce will soon be out of luck.
What’s more, the company pulled back the curtain on its fiscal Q2 2014 earnings results (remember, their fiscal timetable doesn’t completely match up to the calendar on your wall) and reported a GAAP net operating loss of between $950 million and $995 million. Why? According to a statement released by the company, it’s largely because of underwhelming BlackBerry Z10 sales. Quarterly revenue is down dramatically, too. Last time around the company reported revenues of $3.1 billion and 6.8 million shipped smartphones, but BlackBerry barely managed to hit half of that revenue figure in Q2.
All told, BlackBerry raked in $1.6 billion in revenue over the past three months, and revealed that it sold 5.9 million smartphones. It’s important to note, though, that the company only “expects to recognize hardware revenue on approximately 3.7 million BlackBerry smartphones,” and that most of those devices in question run the older BB7 operating system.
At this point, it’s not hard to look at the curious Z10 as an albatross around BlackBerry’s neck, which is why the folks at Waterloo are looking to reposition the device as an entry-level smartphone for the masses. Meanwhile, the recently announced BlackBerry Z30 phablet is going to take over as the flagship BB10 going forward, though at this point I’ve got to wonder just how much more attractive this larger device is going to be compared to its predecessor. Curiously enough, there’s no word of the Q10 at all in the statement; while that’s not concrete evidence for BlackBerry usage trends at large, it’s still interesting to see that the more traditional BB10 device doesn’t seem to be causing the same sorts of issues as the all-touch devices sold alongside it.
So now that all this bad news is out in the open, what is BlackBerry going to do to turn things around? Putting the layoffs and the Z10 repositioning aside, Waterloo’s brass has decided to trim the (already small) size of its device portfolio from six phones to four — that’s two low-end and two high-end smartphones. Expect to see a pronounced shift in favor of BlackBerry’s enterprise activities to boot and a bid to court “productive, professional end users”. I guess that means Alicia Keys may be one of the 4,500 to be ousted before the end of fiscal Q1 2015.
It’s been over a year since the last time the beleaguered Waterloo company halted trading ahead of some important news — the same scenario played out in May 2012 when CEO Thorsten Heins released a statement confirming that RBC and J.P. Morgan were being tapped to help conduct a “strategic review.”
Illustration: Bryce Durbin