Blackberry running in losses, massive restructuring and layoffs in line: Q2FY14 Release

blackberryBlackberry, amidst the cut throat competition in the mobile space, recently released its preliminary second quarter results for Fiscal 2014. The Canadian company expects a severe fall in revenue with a net operating loss of approximately $950 million to $995 million. Also, it announced to lay off around 4500 or 40% of its workforce worldwide, owing to targeted reduction of its operating expenditures by approximately 50% by end of Q1 Fiscal 2015.

The losses are said to be due to the increasingly competitive business environment impacting BlackBerry smartphone volumes, and a pre-tax restructuring charge of $72 million, primarily attributable to BlackBerry Z10 devices. As per the reports the Z10 devices released earlier this year, were not able to get a good response in many of its key markets including US.

 The company’s cash position has also started to deteriorate and is now at $2.6 billion, down from $3 billion last quarter.

The company is going through quite a bad phase for sometime, due to its inability to sustain itself in the presence of competitors like Samsung and Apple. A few months back, in an interview with WSJ, BlackBerry director Bert Nordberg said that Blackberry hopes to survive as a niche company. “BlackBerry has had larger ambitions. But battling giants like Apple, Google and Samsung is tough”, he added.

As per the release, once a leading company in smartphone market, Blackberry recognizes sales of approximately 3.7 million smartphones in the second quarter. Which when compared with Samsung’s 71.3 million phones and Apple’s 31.9 million phone sale, depicts extremely low side of the graph.

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As per a report, the company is also looking out for buyers to close a sale by this November.

However, Blackberry – still trying to be in game – is focusing on massive restructuring and a reduced smartphone portfolio from six to four products –  two high-end devices and two entry-level devices- aimed at professional users. According to the Q2 release, company sees increasing penetration of  BlackBerry Enterprise Service 10 (BES 10) with more than 25,000 commercial and test servers installed to date, up from 19,000 in July 2013. Also, it has hopes attached to recently launched Z30 and BBM- a chat app for iOS and Android.

Is Blackberry really doomed? Feel free to put your comments forward.

To contact author, email at meha@wirefootindia.com

 

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