Ailing BlackBerry to cut 4,500 jobs [Telegraph-Herald (Dubuque, IA)]
(Telegraph-Herald (Dubuque, IA) Via Acquire Media NewsEdge) TORONTO - It was once so
addictive it inspired the nickname "CrackBerry."
Then came the iPhone. Users newly addicted to Facebook and photo- sharing and Angry Birds started flirting with the opposition. And as more smartphones flooded the market with their supersize Samsung screens and thousands of apps, the BlackBerry failed to keep up with the flash.
This year's launch of BlackBerry 10, its revamped operating system, and fancier new devices - the touchscreen Z10 and Q10 for keyboard loyalists - was supposed to rejuvenate the brand and lure customers. But the much-delayed phones have failed to turn the company around. At their peak in the fall of 2009, BlackBerry's smartphones enjoyed global market share of over 20 percent, said Mike Walkley, an analyst with Canaccord Genuity. Their piece of the pie has since evaporated to just 1.5 percent.
Now the company says it will lay off 4,500 employees, or 40 percent of its global work force, as it tries to slash costs by 50 percent and shift its focus back to competing mainly for the business customers most loyal to its brand. A week earlier than expected, BlackBerry surprised the market by reporting Friday that it lost nearly $1 billion in the second quarter. It's booking more than $900 million in charges to write down the value of its glut of unsold smartphones.
Shares were halted pending the news. They plunged as low as $8.01 when the stock reopened for trading, before closing down 17 percent at $8.72.
"This is the end of the BlackBerry as we know it," BGC analyst Colin Gillis said from New York. "This is a major pivot. They are cutting half of their employees and they're going to focus on becoming a niche player focused on the enterprise."
Gillis said he doesn't expect to see a BlackBerry advertisement on television again.
He said it might be more interesting for a prospective buyer, though, now that that it has announced the restructuring. Gillis thinks it's possible that BlackBerry could survive as a much smaller player. At the end of the second quarter, the company had total cash and investments of about $2.6 billion and no debt.
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