BlackBerry revealed the extent of its woes, confirming it is set to cut 40 per cent of its workforce and report an operating loss nearing $1 billion as its latest generation products have failed to find buyers.
As part of its efforts to survive in an “increasingly competitive business environment”, it intends to drop its consumer efforts and “refocus on [the] enterprise and prosumer market, offering end-to-end solutions including hardware, software and services”.
“This puts us squarely on target with the customers that helped build BlackBerry into the leading brand today for enterprise security, manageability and reliability,” said Thorsten Heins, president and CEO of BlackBerry.
The company is forecasting fiscal second quarter revenue of “approximately $1.6 billion”, down from $3.1 billion in the prior sequential quarter, and from $2.87 billion in the same period last year.
It expects to recognise hardware revenue on “approximately 3.7 million smartphones”, the majority of which are powered by the aging BlackBerry 7 platform rather than the latest BlackBerry 10 operating system.
It will record a charge of “$930 million to $960 million” related to its BlackBerry Z10 smartphones, the first in the line of BlackBerry 10 powered devices which were expected to reinvigorate the company’s device sales.
Following the launch of the BlackBerry Z30 last week – an incremental upgrade featuring a larger screen – the Z10 will be “re-tiered” and made available to “a broader, entry-level audience”.
Net loss, including restructuring and inventory related charges, is expected to be in the $950 million to $995 million range.
BlackBerry is looking to reduce operating expenditure by around 50 per cent by “the end of the first quarter 2015”, including the staff cuts which will take it to around 7,000 full-time employees worldwide – down by around 10,000 since its peak.
In its statement, the company did not make any reference to its BBM social messaging business. It has previously been suggested that a spin-out of this unit is on the cards.
BlackBerry will announce its full second quarter results on Friday (27 September).