Blackberry has been in the news lately due to its low key announcement of the new Blackberry 10 device, the Blackberry Z30. Maybe the low key approach taken in announcing that device was a hidden reminder of the tough times the Canadian device maker has been going through. Q2’s financial results are in and they don’t look good at all.
Many expected Blackberry 10 to be Blackberry’s savior but that is turning out to be a huge expectation that will hardly ever be met. According to Yahoo! Finance, the company has a loss of close to $1 billion and there is even more bad news: there are plans to downsize the global Blackberry workforce by axing around 4,500 employee’s from the Waterloo-based company’s payroll. With a total employee count of slightly over 12,700 worldwide, the 4,500 who are to be axed represent a significant percentage of the workforce (around 40%) and completely dims the future prospects of the company in the mobile industry. The move to reduce the workforce is based on the company’s outlook at the future. It wants to have reduced significantly its operating expenditures by the first quarter of the 2015 financial year. In line with those cost-cutting measures after operating losses of between $950 and $955 million, Blackberry also plans to reduce the number of devices it is making from six to four: two high end and two low end. The Blackberry Z30 (pictured below) is just one of the two high end devices the company plans to throw its (feather)weight behind. The Blackberry Z10, the company’s high end device so far running Blackberry 10 OS is expected to drop the pecking order and be introduced in more markets worldwide as an entry-level Blackberry device.
For Blackberry diehard fans (and they are many), today’s news must be very hard to digest. All is not looking up though the company’s board has really been trying to stay on course by making various strategic decisions to make the sleeping Blackberry giant wake up once more. Though so far those efforts haven’t borne any fruit, with dwindling fortunes, someone has to make the tough decisions. Some of those decisions have included availing Blackberry’s jewel, Messenger, to other platforms and we expect it to land on Android and iOS devices this weekend. Also the earlier decision to drop the founding co-CEOs of the company was inched to turn tables. Many have previously written Blackberry’s eulogy in the past but today more than ever before, there are clear signs that all is not well. With financial experts still expecting Blackberry 7 devices to rake in more money for the company than Blackberry 10 devices, it is clear the strategy that saw BB 10’s launch pushed forward a couple of times before we finally saw it first on the Z10 and the Q10 early this year, has not worked out.
With new players like Cyanogen entering the mobile scene to compete and go for the same marketshare that Blackberry is after and the continued dominance of traditional players like iOS and Android, things are bound to even get more grey than they are currently. The writing is on the wall. Luckily though, other enterprise services (BES) not tied to mobile offered by Blackberry continue to offer the company some hope.
Full details of Blackberry’s Q2 financial results are expected to be released next Friday the 27th of September.
In a nutshell:
- Blackberry sold around 3.7 million smartphones in Q2, majority of which are Blackberry 7 devices.
- It made an operating loss of $950-955 million
- It is axing 4,500 workers from its global workforce
- Revenues for Q2 are expected to be around $1.6 billion
- It’s smartphone portfolio will be trimmed from 6 to 4