BLACKBERRY WARNS OF BIG LOSS, 4,500 JOB CUTS [Daily Tribune (Bahrain)]
(Daily Tribune (Bahrain) Via Acquire Media NewsEdge) ? ? BlackBerry Ltd has warned it ex pects 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 expects to report a net operating loss of between $950 million and $995m in the quarter ended August 31, due to writedowns and other factors. "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 per cent to C$8.25 on Friday, their lowest this year, before closing down 16pc at C$9.08. The company's Nasdaq-listed shares ended 17pc 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 privateequity firms about possibly mounting a joint bid for the struggling smart phone maker. Lazaridis, who owns a 5.7pc stake in the company, has reached out to private equity firms that include the Blackstone Group and Carlyle Group, said the report. 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. For the second quarter, the company expects to have sold about 3.7m BlackBerry smartphones to end users.
BlackBerry said it is changing the way it accounts for device sales, now booking revenue only after a device is sold to the end customer, and not to carriers. Worryingly, most of the unit sales being recognised in the quarter are older-generation BlackBerry 7 devices.
The company said it could not recognise BlackBerry 10 devices shipped in the quarter until those devices are sold through to end customers. That suggests carriers have been having difficulty moving the new line of devices. BlackBerry said it expects its adjusted net loss, before giving effect to the inventory and restructuring provisions, will be in a range of about $250m to $265m, or a loss of 47 cents to 51 cents a share. BlackBerry sees about $1.6 billion of revenue in the second quarter, of which roughly 50pc is expected to be revenue from its services unit. ? ?
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