BlackBerry has issued a trading update and is warning that it expects to post a loss of around US$1 billion for the second financial quarter of the year.
The company is also confirming rumours of massive redundancies, and is cutting approximately 4,500 employees – which accounts for about 40 per cent of the workforce.
The firm also said that it would cut its product range from six smartphones to four, focusing on enterprise and professional consumer-centric devices, including two high-end devices and two entry-level devices.
Financially, the company expects to post a net operating loss of approximately US$950 million to US$995 million; loss includes a primarily non-cash, pre-tax inventory charge of approximately US$930 million to US$960 million resulting from the increasingly competitive business environment impacting BlackBerry smartphone volumes, and a pre-tax restructuring charge of US$72 million.
Thorsten Heins, president and CEO of BlackBerry said, "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. Going forward, we plan to refocus our offering on our end-to-end solution of hardware, software and services for enterprises and the productive, professional end user."
At the end of the second quarter, total cash, cash equivalents and investments is estimated to be approximately US$2.6 billion. The company has no debt.
The company currently expects to report revenue for the second quarter of approximately US$1.6 billion, of which approximately 50 per cent is expected to be service revenue.
For the second quarter, the company expects to recognise hardware revenue on approximately 3.7 million BlackBerry smartphones. Most of the units recognised are BlackBerry 7 devices, in part because certain BlackBerry 10 devices that were shipped in the quarter will not be recognised until those devices are sold through to end-customers. During the second quarter, approximately 5.9 million BlackBerry smartphones were sold through to end-customers, which included shipments made prior to the second quarter and which reduced the company’s inventory in channel.
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