September 20, 2013 6:15 pm
Updated: September 20, 2013 8:35 pm

BlackBerry cuts a third of workforce; faces billion-dollar loss

A A

Video: Things have gone from bad to worse for BlackBerry as the company reports a $1-billion loss. Global National’s Jen Tryon reports.

BlackBerry is eliminating 4,500 jobs across its operations, the troubled smartphone-maker announced Friday afternoon, amid poor sales of its newest device and ahead of a potential takeover.

The company also disclosed it will book a loss of as much of $1 billion in the latest quarter when it reports next week, likely tied to writedowns of handsets that remain unsold.

Story continues below

The cuts amount to just over 35 per cent of Waterloo, Ont.-based BlackBerry’s workforce of 12,700, and come just over a year after the company cut 5,000 jobs in June, 2012.

It wasn’t immediately clear which departments will bear the brunt of the cuts but these layoffs are still about 500 fewer than suggested in media reports which surfaced earlier in the week.

Shares were halted around 3 p.m. EST on both the Nasdaq and Toronto Stock Exchange ahead of the announcement. The stock price dove after shares resumed trading, ending the day down 16 per cent, to $9.08.

Read more: New iPhone, old problems for fading BlackBerry

The technology giant has seen it share of the global smartphone market shrink rapidly over the last few years, declining to just 3 per cent this year as rivals Apple Inc. and Samsung crowding out the far smaller Canadian device company.

Apple’s market share tops 40 per cent, a figure likely bolstered by the launch of the iPhone 5S and lower cost 5C. Both of Apple’s new handsets went sale Friday – two days after BlackBerry unexpectedly unveiled the Z30, a bigger and more robust device than either the Z10 or Q10, phones the company was relying on to turn its fortunes around.

But those phones, have largely sat on the shelf as consumers opt overwhelmingly for Apple or Samsung products running on Google’s Android mobile operating system.

A price cut on the new devices this summer did little to ignite sales, analysts said.

“Our conversations with global distributors indicate high BlackBerry channel inventory levels despite sharp [average selling price] declines for BB10 smartphones,” Canaccord Genuity analyst Michael Walkley said in a note to clients this month.

Total BlackBerry shipments this year, which include the newest handsets as well older models shipped to emerging markets, are expected to total about 26 million. That compares with iPhone shipments of 153 million and Samsung smartphone shipments of 315 million.

Video: Tech analyst Carmi Levy says company as we know it will cease to exist soon

 The company has put itself up for sale and is reportedly in the process of seeking out potential buyers for all or parts of its business. An investor group led by Fairfax Financial – BlackBerry’s single biggest shareholder – is thought to have been trying to put together a consortium that would purchase the company and take it private.

Canadian pension funds were reportedly part of the initial parties thought to be taking part, but have since denied interest.

Direct link to chart

Chart: Track changes in Blackberry’s share price. Click here for a 13-year interactive.

berry-chart

© 2013 Shaw Media

Report an error

Comments

Want to discuss? Please read our Commenting Policy first.