BlackBerry Ltd warned on Friday it Reuters
BlackBerry Ltd warned on Friday it expects
to report a huge quarterly operating loss
next week and that it will cut more than a
third of its global workforce, rekindling
fears of the company's demise and
sending its shares into a tailspin.
The company, which has struggled to claw
back market share from the likes of Apple
Inc's iPhone and Samsung Electronics Co
Ltd's Galaxy phones, said it expects to
report a net operating loss of between
$950 million and $995 million in the
quarter ended August 31, due to
writedowns and other factors.
The results will put more pressure on
BlackBerry to find a buyer for either some
parts of the company, or for all of it. It
said last month it is weighing its options,
including an outright sale, in the face of
persistently lackluster sales of its new
smartphones, which run on the
BlackBerry 10 operating system.
"The company has sailed off a cliff," said
BGC Partners analyst Colin Gillis. "What
do you expect when you announce you're
up for sale? Who wants to commit to a
platform that could possibly be shut
down?"
Reuters reports that BlackBerry's
Toronto-listed shares fell as much as 23.7
percent to C$8.25 on Friday, their lowest
this year, before closing down 16 percent
at C$9.08. The company's Nasdaq-listed
shares ended 17 percent lower at $8.73,
after falling as low as $8.01.
The company said it plans to shave its
operating costs by some 50 percent over
the next nine months, as it aims to focus
its attention on the enterprise market and
become a more niche player. But some
analysts are skeptical that the company
can cut its way back to prosperity.
"We believe the most likely outcome is a
break-up or sale in total or in parts," said
UBS analyst Amitabh Passi.
A source at a potential suitor said the
warning on Friday may speed up the sale
process, but it also adds more risks.
"I think most will view it as pretty scary.
It's a melting ice cube," said the source.
The Wall Street Journal, citing unnamed
sources, on Friday said the company's
former head Mike Lazaridis has been
talking with private-equity firms about
possibly mounting a joint bid for the
struggling smartphone maker.
Lazaridis, who owns a 5.7 percent stake in
the company, has reached out to private
equity firms that include the Blackstone
Group and Carlyle Group, said the report.
Lazaridis was not immediately reachable
for comment and BlackBerry declined to
comment.
BLACKBERRY 10 SALES WEAK
Waterloo, Ontario-based BlackBerry, once
Canada's premier technology company,
said it expects to book a $930 million to
$960 million writedown in its fiscal
second quarter owing to a ballooning
stockpile of unsold BlackBerry Z10
devices.
The company had bet much of its future
on the popularity of the Z10 touchscreen
device - the first of the smartphones to be
powered by its new BlackBerry 10
operating system. While the device drew
favorable reviews, it has failed to gain
traction among consumers since its
introduction earlier this year.
For the second quarter, the company
expects to have sold about 3.7 million
BlackBerry smartphones to end users.
BlackBerry said it is changing the way it
accounts for device sales, now booking
revenue only after a device is sold to the
end customer, and not to carriers.
Worryingly, most of the unit sales being
recognized in the quarter are older-
generation BlackBerry 7 devices. The
company said it could not recognize
BlackBerry 10 devices shipped in the
quarter until those devices are sold
through to end customers. That suggests
carriers have been having difficulty
moving the new line of devices.
MAJOR JOB CUTS
BlackBerry said it expects its adjusted net
loss, before giving effect to the inventory
and restructuring provisions, will be in a
range of about $250 million to $265
million, or a loss of 47 cents to 51 cents a
share.
BlackBerry sees about $1.6 billion of
revenue in the second quarter, of which
roughly 50 percent is expected to be
revenue from its services unit.
Analysts, on average, had forecast a loss
of 15 cents a share on revenue of $3.06
billion, according to Thomson Reuters I/
B/E/S.
"The revenue and device shipment
numbers are pretty surprising given how
weak it is," said UBS analyst Passi. "I think
many of us were expecting a pretty
difficult quarter, but this is much worse
than we anticipated."
The company, which had warned that job
cuts were in the offing, plans to shed
4,500 jobs. BlackBerry has already
undergone a major round of job cuts over
the last 12 months. It employed 12,700
people as of March, and once had close
to 20,000 employees.
BlackBerry said its cash position as of the
end of the fiscal second quarter is
estimated to be about $2.6 billion, down
from about $3.1 billion three months
earlier.
"It makes it even more difficult for
somebody to step in and buy the
company. If you look at what's been
happening, they've burnt through
approximately half a billion dollars in
cash in the last three months," said
Veritas Investment Research analyst
Neeraj Monga.
to report a huge quarterly operating loss
next week and that it will cut more than a
third of its global workforce, rekindling
fears of the company's demise and
sending its shares into a tailspin.
The company, which has struggled to claw
back market share from the likes of Apple
Inc's iPhone and Samsung Electronics Co
Ltd's Galaxy phones, said it expects to
report a net operating loss of between
$950 million and $995 million in the
quarter ended August 31, due to
writedowns and other factors.
The results will put more pressure on
BlackBerry to find a buyer for either some
parts of the company, or for all of it. It
said last month it is weighing its options,
including an outright sale, in the face of
persistently lackluster sales of its new
smartphones, which run on the
BlackBerry 10 operating system.
"The company has sailed off a cliff," said
BGC Partners analyst Colin Gillis. "What
do you expect when you announce you're
up for sale? Who wants to commit to a
platform that could possibly be shut
down?"
Reuters reports that BlackBerry's
Toronto-listed shares fell as much as 23.7
percent to C$8.25 on Friday, their lowest
this year, before closing down 16 percent
at C$9.08. The company's Nasdaq-listed
shares ended 17 percent lower at $8.73,
after falling as low as $8.01.
The company said it plans to shave its
operating costs by some 50 percent over
the next nine months, as it aims to focus
its attention on the enterprise market and
become a more niche player. But some
analysts are skeptical that the company
can cut its way back to prosperity.
"We believe the most likely outcome is a
break-up or sale in total or in parts," said
UBS analyst Amitabh Passi.
A source at a potential suitor said the
warning on Friday may speed up the sale
process, but it also adds more risks.
"I think most will view it as pretty scary.
It's a melting ice cube," said the source.
The Wall Street Journal, citing unnamed
sources, on Friday said the company's
former head Mike Lazaridis has been
talking with private-equity firms about
possibly mounting a joint bid for the
struggling smartphone maker.
Lazaridis, who owns a 5.7 percent stake in
the company, has reached out to private
equity firms that include the Blackstone
Group and Carlyle Group, said the report.
Lazaridis was not immediately reachable
for comment and BlackBerry declined to
comment.
BLACKBERRY 10 SALES WEAK
Waterloo, Ontario-based BlackBerry, once
Canada's premier technology company,
said it expects to book a $930 million to
$960 million writedown in its fiscal
second quarter owing to a ballooning
stockpile of unsold BlackBerry Z10
devices.
The company had bet much of its future
on the popularity of the Z10 touchscreen
device - the first of the smartphones to be
powered by its new BlackBerry 10
operating system. While the device drew
favorable reviews, it has failed to gain
traction among consumers since its
introduction earlier this year.
For the second quarter, the company
expects to have sold about 3.7 million
BlackBerry smartphones to end users.
BlackBerry said it is changing the way it
accounts for device sales, now booking
revenue only after a device is sold to the
end customer, and not to carriers.
Worryingly, most of the unit sales being
recognized in the quarter are older-
generation BlackBerry 7 devices. The
company said it could not recognize
BlackBerry 10 devices shipped in the
quarter until those devices are sold
through to end customers. That suggests
carriers have been having difficulty
moving the new line of devices.
MAJOR JOB CUTS
BlackBerry said it expects its adjusted net
loss, before giving effect to the inventory
and restructuring provisions, will be in a
range of about $250 million to $265
million, or a loss of 47 cents to 51 cents a
share.
BlackBerry sees about $1.6 billion of
revenue in the second quarter, of which
roughly 50 percent is expected to be
revenue from its services unit.
Analysts, on average, had forecast a loss
of 15 cents a share on revenue of $3.06
billion, according to Thomson Reuters I/
B/E/S.
"The revenue and device shipment
numbers are pretty surprising given how
weak it is," said UBS analyst Passi. "I think
many of us were expecting a pretty
difficult quarter, but this is much worse
than we anticipated."
The company, which had warned that job
cuts were in the offing, plans to shed
4,500 jobs. BlackBerry has already
undergone a major round of job cuts over
the last 12 months. It employed 12,700
people as of March, and once had close
to 20,000 employees.
BlackBerry said its cash position as of the
end of the fiscal second quarter is
estimated to be about $2.6 billion, down
from about $3.1 billion three months
earlier.
"It makes it even more difficult for
somebody to step in and buy the
company. If you look at what's been
happening, they've burnt through
approximately half a billion dollars in
cash in the last three months," said
Veritas Investment Research analyst
Neeraj Monga.
No comments:
Post a Comment