Blackberry to cut 4,500 jobs amid earnings plunge

The BBC's Michelle Fleury says Blackberry "was once a pioneer" in the smart phone field

Related Stories

Blackberry has announced it is planning to cut 4,500 jobs, or 40% of its worldwide workforce, in an attempt to staunch huge losses.

The smartphone maker said it anticipated a loss of as much as $995m (£621m) when it reports its second-quarter earnings next week.

Shares in the firm closed down 17% after briefly being halted following the announcement.

In August, the Canadian company said it was evaluating a possible sale.

In a statement on Friday, Blackberry's chief executive Thorsten Heins said: "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."

"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."

'Off a cliff'

The company said the losses were primarily attributable to disappointing sales of its new Z10 model smartphone.

Released in January to much fanfare after many delays, the phone has failed to enthuse consumers.

In June, Mr Heins said that the company had shipped only 2.7 million Z10 phones out of total shipments of 6.8 million Blackberry phones in the three months to 1 June. Many Blackberry users had instead opted to stick with earlier models.

Over the summer, word trickled out the company had hired a series of advisors to help it explore options.

In August, board member Timothy Dattels was appointed to a committee that would consider different business models, including a potential sale.

"We believe that now is the right time to explore strategic alternatives," said Mr Dattels at the time.

Analysts have long indicated that Blackberry's trove of patents could be attractive to potential buyers, but none of the large technology companies have publicly indicated interest.

"The company has sailed off a cliff," BGC technology analyst Colin Gillis told the BBC.

BlackBerry Ltd

Last Updated at 22 Jul 2014, 16:00 ET *Chart shows local time BlackBerry Ltd intraday chart
price change %
9.92 -
-0.12
-
-1.20

"This is the quarter where Blackberry as you used to know it is no longer."

Mr Gillis said the job cuts and losses today could dampen the enthusiasm of potential buyers and might indicate the company could not find any interested parties.

This week, the company released a new version of its handset, the Z30, which was praised by observers but was nonetheless overshadowed by Apple's launch of its new smartphone products.

"It's not a bad phone," said Mr Gillis.

"I'm sure they'll sell at least one."

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    MARKET UPDATE 08:54:

    Europe's main stock markets are flat today without a clear sense of direction as investors digest the continuing conflicts in Gaza and Ukraine and their potential impact. The biggest rise on the FTSE 100 is Capita - up 1.13%, or 13p, to 1,168p - following its trading update this morning.

    • The FTSE 100 is 0.15% higher at 6805.50
    • Germany's Dax is higher by 0.41% at 9773.77
    • France's Cac-40 is up 0.14% at 4375.73
     
  2.  
    COMMONWEALTH BUSINESS 08:40:
    A swimmer practices using a snorkel during a training session at the Tollcross International Swimming Centre

    The Queen attends the opening ceremony of the Commonwealth Games in Glasgow tonight. But before all that there is the Commonwealth Business Conference. The event will focus on issues and opportunities common to all Commonwealth countries, including employment and skills, infrastructure development, improving financial services for business and the development of the smart cities of the future.

     
  3.  
  4.  
    MARKET UPDATE 08:24:

    Japan's Nikkei stock average closed down 0.1% to 15,328.56 as the Tokyo markets kept their focus on tensions in Gaza and the Middle East. Meanwhile, MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5% after earlier pushing to a three-year peak. It moved in tandem with the S&P 500, which hit a new high overnight as traders turned their attention to positive corporate earnings.

     
  5.  
    TOUR DE FRANCE Via Twitter James Baker Councillor

    The economic benefits of Yorkshire hosting the opening stages of the Tour de France a fortnight ago are being called into question by James Baker, a local councillor for Warley ward on Calderdale Council in West Yorkshire. He tweets: "Interesting getting some feedback that Tour de France weekend wasn't great for some local businesses and takings were down for some." That's slightly at odds with the £100m estimated economic benefit the county was expecting.

     
  6.  
    BHP BILLITON 07:54:
    Ore

    BHP Billiton posted record annual iron ore production in Western Australia for the fourteenth consecutive year, while Queensland coal production also hit an all-time high. Rival mining giant Rio Tinto last week said its iron ore production and shipments surged to record highs in the first-half of the year as it boosted output despite a recent fall in commodity prices.

     
  7.  
    PAYPAL LENDER 07:39: BBC Radio 4
    A general view of the home page of PayPal.

    Online payments firm Paypal is to begin offering loans to small businesses. The loans will be in the form of cash advances and will be repayable when those small businesses make sales, it has said. Rupert Keeley, chief executive of PayPal Europe has told Radio 4's Today programme the firm hasn't set interest rates for these loans yet, but claims "they are going to be very competitive indeed". He adds businesses can set how much and how quickly they repay the loans.

     
  8.  
    ISRAEL FLIGHTS 07:25:
    British Airways (BA) Airbus A380 comes in to land at Heathrow airport

    Indefatigable British Airways has said it will continue to fly into Ben Gurion international airport in Tel Aviv despite most airlines deciding to cancel flights into the Israeli capital. All US airlines and most European flights into Israel have been halted after a rocket fired from Gaza landed one mile away from the airport. US airlines were stopped by the Federal Aviation Authority from landing in Tel Aviv for 24 hours.

     
  9.  
    CAPITA EARNINGS 07:10:

    Capita says "underlying" profit before tax for the first six months of the year rose 16% to £238m. However, if you factor in things like acquisition costs and reductions in the value of its assets, it's a drop in profit to £152.3m from £157.5m. Still, dividend is up 10.3% to 9.6 p.

     
  10.  
    RUSSIAN SANCTIONS 06:51: BBC Radio 4
    Vladimir Putin

    More from Mr Grodzki on Russian sanctions: He says the Russian economy is very resilient to sanctions and Russia is virtually self-sufficient. It can sell its oil elsewhere in the world - it recently signed a deal with China - and he says France cancelling defence contracts may even boost the Russian economy and Russian jobs.

     
  11.  
    RUSSIAN SANCTIONS 06:41: BBC Radio 4

    Georg Grodzki has now popped up on the Today programme, again talking about sanctions against Russia. He says: "It's very difficult to impose sanctions on a country that needs healthy relations with the West less than the West needs healthy relations with it." He adds Russian can buys the goods they want to from elsewhere. They would prefer to buy goods from the West but if they can't, they will live with it, he says.

     
  12.  
    RUSSIAN BONDS 06:33: Radio 5 live

    Russia cancelled one of its weekly bond sales yesterday, its first in three months, citing "unfavourable market conditions." On 5 live we have Georg Grodzki, formerly of Legal & General, telling us why. Sometimes governments realise they don't need the money he says, but this time that isn't the case. Russia's borrowing costs, which are about 4.6% for five year bonds - already high - have only got worse in recent days, he says.

     
  13.  
    TAX 06:23: Radio 5 live

    "Everyone should pay taxes at a flat rate from the first dollar," says Arthur Laffer, a former adviser to Ronald Reagan on 5 live. People like to avoid tax, he says, and taxing everyone the same should help stop gaming the system, he says. Does that mean taxing the poor the same? Yes, he says. Do you reward tax dodgers then? "They pay the tax rather than doing the dodges," he says.

     
  14.  
    ROYAL MAIL 06:11: Radio 5 live

    James Bevan of CCLA Investment Management is back on 5 live talking this time about Royal Mail's performance. Their annual shareholder meeting is on Thursday and he wants to hear more about the French antitrust case they, TNT and FedEx are involved in. Royal Mail has received notice from French competition authorities over a possible breach of antitrust law by one of its subsidiaries, which could result in a fine for the recently privatised group.

     
  15.  
    TESCO SHARES 06:01: Radio 5 live

    Tesco shares were down yesterday, but when it was announced they were losing their chief executive, the shares rose. How come? James Bevan, chief investment officer at CCLA Investment Management is explaining what he thinks on 5 live. "When Philip Clarke was let go there was also a profit warning," he says. "For that to drive the share price up seemed absolutely mad."

     
  16.  
    06:00: Howard Mustoe Business reporter

    Hello! You can, as ever, get in touch with your views and experiences via email bizlivepage@bbc.co.uk and via twitter @BBCBusiness.

     
  17.  
    06:00: Matthew West Business Reporter

    Good morning everyone. We've had Microsoft second quarter earnings overnight - they were bad - as well as Apple - good- flights into Israel have been halted and there's a row over Russian sanctions to contend with. the morning is only just getting started.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.