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BlackBerry cuts 4500 jobs, loses nearly $1 billion in Q2

Armando Rodriguez and Martyn Williams, IDG News Service | Sept. 23, 2013
With over a third of its staff gone and with its stock continuing to drop, it looks like we're close to the end of BlackBerry.

BlackBerry

Very bad news for BlackBerry. The Canadian smartphone maker posted a $995 million operating loss for the second quarter and will cut 4500 jobs—over a third of its staff—in a bid to cut costs.

The news comes moments after the company halted trading on its stock, which has been on a steady downward decline in the past several months.

Recent BlackBerry phones, like the Z10 and Q10, failed to catch on with consumers, and BlackBerry has been fighting a losing battle against Microsoft for the number three spot in the mobile market.

In light of the results, the company said it plans to restructure and lay off around 4500 staff and cut the number of phones it sells from six to four handsets. Those phones will be targeted at the enterprise and prosumer markets.

Statement from the CEO
"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," Thorsten Heins, BlackBerry president and CEO, said in a statement.

"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," Heins said in the statement.

Earlier this week, BlackBerry brought its popular BlackBerry Messenger service to both Android and iOS, giving people one less reason to choose a BlackBerry phone over the competition.

Heins has spent the last year shuttering BlackBerry operations across the globe in order to cut costs, so the massive staff layoffs aren't entirely surprising. According to a report by the Wall Street Journal Thursday, the company was preparing to cut up to 40 percent of its staff by year's end—though the news is still shocking.

As Android and iOS continue to gain ground and with Microsoft expected to announce a much-anticipated update to Windows Phone in the coming weeks, it seems like BlackBerry has crossed over to the point of no return.

The struggling smartphone maker quantified just how bad business is at the moment, as users abandon its once-dominant platform.

The company said it plans to record a GAAP net operating loss during the July to September quarter of almost $1 billion as it writes down an excess of Z10 smartphones that it failed to sell.

It expects sales for the quarter to be around $1.6 billion, a drop of 45 percent from the same quarter in 2012, the company said Friday.

 

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