TORONTO: BlackBerry Ltd warned it expected to report a huge quarterly operating loss next week and that it will cut more than a third of its global workforce, rekindling fears of the company’s demise and sending its shares into a tailspin.
The company, which has struggled to claw back market share from the likes of Apple Inc’s iPhone and Samsung Electronics Co Ltd’s Galaxy phones, said it expected to report a net operating loss of between $950m and $995m in the quarter ended August 31, due to writedowns and other factors.
The results will put more pressure on BlackBerry to find a buyer for either some parts of the company, or for all of it. It said last month it is weighing its options, including an outright sale, in the face of persistently lackluster sales of its new smartphones, which run on the BlackBerry 10 operating system.
“The company has sailed off a cliff,” said BGC Partners analyst Colin Gillis. “What do you expect when you announce you’re up for sale? Who wants to commit to a platform that could possibly be shut down?”
BlackBerry’s Toronto-listed shares fell as much as 23.7 percent to C$8.25 on Friday, their lowest this year, before closing down 16 percent at C$9.08. The company’s Nasdaq-listed shares ended 17 percent lower at $8.73, after falling as low as $8.01.
The company said it plans to shave its operating costs by some 50 percent over the next nine months, as it aims to focus its attention on the enterprise market and become a more niche player. But some analysts are sceptical that the company can cut its way back to prosperity.
“We believe the most likely outcome is a break-up or sale in total or in parts,” said UBS analyst Amitabh Passi.
A source at a potential suitor said the warning on Friday may speed up the sale process, but it also adds more risks.
“I think most will view it as pretty scary. It’s a melting ice cube,” said the source.
The Wall Street Journal, citing unnamed sources, on Friday said the company’s former head Mike Lazaridis has been talking with private-equity firms about possibly mounting a joint bid for the struggling smartphone maker.
Lazaridis, who owns a 5.7 percent stake in the company, has reached out to private equity firms that include the Blackstone Group and Carlyle Group, said the report.
Lazaridis was not immediately reachable for comment and BlackBerry declined to comment.
Waterloo, Ontario-based BlackBerry, once Canada’s premier technology company, said it expects to book a $930m to $960m writedown in its fiscal second quarter owing to a ballooning stockpile of unsold BlackBerry Z10 devices.
The company had bet much of its future on the popularity of the Z10 touchscreen device — the first of the smartphones to be powered by its new BlackBerry 10 operating system. While the device drew favourable reviews, it has failed to gain traction among consumers since its introduction earlier this year.
Reuters
