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BlackBerry Deathwatch: company announces layoffs, nearly $1 billion in losses, and strategy change

News by Andrew Kameka on Friday September 20, 2013.

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BlackBerry is in serious trouble. The once leading smartphone manufacturer has warned investors today that it anticipates $930 million to $960 million in losses related to unsold devices, and has decided to cut more than third of its workforce as it shifts its business focus.

BlackBerry released preliminary details today concerning its earnings for the second quarter of its fiscal 2014. The Canadian device and services company expects revenue of about $1.6 billion. It also expects at least $930 million in inventory charges because its retail partners are sitting on piles of unsold Z10 devices. The first BlackBerry 10 device has performed poorly because of "more intense competition" and will force BlackBerry to lower the price of the phone in order to attract an entry-level audience.

The poor sales have prompted BlackBerry to alter its product portfolio and dramatically change its strategy. Two planned devices have been shelved as BlackBerry has decided to exit the consumer market and focus on "prosumer" and enterprise users. Only four BlackBerry products are in the pipeline, including two for the high-end and two for the entry-level. The recently announced BlackBerry Z30 will be the first of the high-end options.

BlackBerry originally seemed happy with Z10 sales as the company loudly shot down reports of low sales and claimed it was very happy with the response. However, time has clearly been unkind to the Z10 as the device has failed to slow the trend of BlackBerry users forsaking BB10 for Android and iOS. Even the outdated BB 7 accounts for "most of the units" of phones sold in the last quarter.

Going forward, BlackBerry will focus on its core enterprise customers and services. Abandoning its consumer aspirations will significantly reduce BlackBerry's staff. Blackberry plans to cut 4,500 jobs, about 40 percent of its current workforce, in the near future with more cuts to follow. Half of BlackBerry's current workforce will not be with the company by the end of the fiscal year.

CEO Thorsten Heins released the following statement to explain the shift in strategy:

"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. This puts us squarely on target with the customers that helped build BlackBerry into the leading brand today for enterprise security, manageability and reliability."

source: BlackBerry

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Andrew Kameka
Andrew is based in Miami, Florida.

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