BlackBerry axes 40 percent of its workforce as part of enterprise-focussed restructure
BlackBerry’s struggles have taken a turn for the worse after it announced it expected second quarter losses of as much as $995 million (£624m) and planned to cut 4,500 jobs, or 40 percent of its global workforce, with much of the blame attributed to the failure of the BlackBerry Z10 to gain traction in a competitive market.
The latest job cuts had been expected and could make BlackBerry more attractive to potential buyers.
“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,” said CEO Thorsten Heins.
The beleaguered Canadian smartphone manufacturer said it expected revenues to amount to $1.6 billion, a figure which included sales of 3.7 million smartphones, the majority of which were BlackBerry 7-powered devices. BlackBerry claimed it had sold 5.9 million smarpthones, but could not recognise all of them because they had not yet reached end users.
Around half of its revenue was derived from services, which proved to be a minor source of optimism for the company. It increased the number of BlackBerry Enterprise Service (BES) servers to 25,000 from 19,000 July 2013 and recently announced BlackBerry Messenger (BBM) would be made available to iOS and Android from 22 September.
It said it will refocus on the enterprise and ‘prosumer’ market with packages comprising hardware, software and services. The company will consolidate its smartphone offering to just two high-end and two entry-level devices. As part of this plan, the BlackBerry Z10 will be discounted to increase the market share of BlackBerry 10 and the recently unveiled BlackBerry Z30 phablet will be appointed its new flagship handset.
“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,” added Heins. “This puts us squarely on target with the customers that helped build BlackBerry into the leading brand today for enterprise security, manageability and reliability.”
BlackBerry was once widely considered the market leader in enterprise smartphones, but has seen its share eroded by the likes of Apple and Samsung devices which can offer many of the same security and administration features.
Its hopes of a recovery rested on a successful launch of smartphones running the BlackBerry 10 operating system, but sales have been disappointing and the company announced last month it had formed a committee to evaluate the company’s strategic alternatives going forward, including putting itself up for sale. BlackBerry announced today the committee would continue to explore all available options.
It had been suggested BlackBerry’s extensive catalogue of patents could be worth as much as $5 billion if sold to one party, while its 72 million subscribers, of which 20 million are believed to be enterprise or corporate, are also believed to be valuable.
Some analysts have also said the fact it owns most of its own facilities and it had already spent a significant amount of money on restructuring and redundancies was also in its favour, but other said they saw next to no value in the handset business and even estimated it would cost close to $2 billion to shut down.
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