BlackBerry is cutting 40% of its workforce and withdrawing from the consumer smartphone market after revealing a likely loss of nearly $1bn in its latest financial quarter.
BlackBerry’s preliminary second quarter results revealed the sixth consecutive quarterly loss and a continued decline in sales. Revenue is forecast at $1.6bn, down from $2.9bn in the same period last year – and compared to $4.2bn two years ago.
The net loss of $950m to $995m is mostly attributed to writing off more than $930m against unsold inventory of the BlackBerry Z10 phone. BlackBerry launched the Z10 – the company’s first full touchscreen device – at the start of 2013, as the flagship product intended to recover the firm’s position as a market leader.
Despite positive reviews for the Z10, it failed to capture buyer’s interest. The preliminary results do not say how many of the new BlackBerry 10 devices have sold, but the firm admitted most of the 3.7 million smartphones sold in the quarter were older BlackBerry 7 devices. A further 2.2 million devices were shipped but were not recognised as revenue for the three-month fiscal period.
By comparison, Apple sold more than nine million new iPhones in the first weekend after their launch.
As a result of the decline, BlackBerry is cutting 4,500 jobs, representing 40% of its global workforce. It will reduce its portfolio of devices from six to four and will exit the consumer market to focus on business and “prosumer” sales – the latter category defined as the “productive, professional end user” by CEO Thorsten Heins.
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“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,” Thorsten Heins said.
The one glimmer of light for BlackBerry was a rise in installations of BlackBerry Enterprise Server (BES) 10, its latest secure mobile device management (MDM) software for enterprises. The company said more than 25,000 commercial and test MDM BES 10 servers have been installed to date, compared to 19,000 in July 2013.
“Our enterprise business continues to reflect the trust that governments and businesses have placed in the BlackBerry platform,” said Heins.
“Security matters and enterprises know the gold standard in enterprise mobility is BlackBerry.”
BES10 extended its MDM capabilities to manage Android and iOS devices for the first time.
The company is already up for sale after its board announced in August a strategic review of BlackBerry’s future, a process that is still ongoing.