OTTAWA: At their peak, just a few years ago, BlackBerry smartphones were symbols of corporate and political power. When President Barack Obama took office, he made keeping his BlackBerry a personal priority, and when BlackBerry service had a hiccup so did business on Wall Street.
But after being upstaged time and again by industry rivals, the devices may soon remain only in memories.
On Friday, BlackBerry announced that it would lay off 4,500 employees, nearly 40 per cent of its already reduced workforce. The cut is so deep that some analysts and investors said the company’s days as a smartphone maker were effectively over.
The company also said that it expected to report a quarterly loss of nearly $1 billion next week, mainly the result of a write-off of unsold BlackBerry phones, but also because of payments to stop manufacturers and suppliers from adding to the pile. And of its six phones that the company offers, two will be discontinued.
“This is a recognition that they lost the handset war,” said James H. Gellert, the chairman and chief executive of Rapid Ratings, an investment risk evaluation firm. “It’s certainly a waving of the big white towel.”
The company halted the trading of its shares to make the bleak announcement. It also said that revenue was expected to have been $1.6 billion in the second quarter, almost half of the $3 billion analysts had anticipated. Sales of phones during that time, it said, totaled 3.7 million. Apple, by comparison, sold 31.2 million iPhones during its last quarter.
More alarming to many analysts was BlackBerry’s announcement that it had used about $500 million in cash to stay operating during the last quarter, lowering its cash holdings to $2.6 billion. Although the company has been losing market share for several years, it had managed to increase its cash holdings.
Shares in the company tumbled 17 per cent for the day, to $8.73, nearly all of it after trading was resumed.
Four years ago, BlackBerry had 51 per cent of the North American smartphone market, according to the research firm Gartner. But the fast-changing industry, and in particular phones from Apple and Samsung, left the company behind.
“The rest of the smartphone world is racing ahead at top speed while we have BlackBerry stuttering to a stop,” said Michael Gikas, the senior editor for electronics at Consumer Reports.
BlackBerry’s executives initially looked down on the move to making smartphones into pocket-size computers, which was pioneered by Apple’s iPhone. But consumers preferred smartphones with full touch screens, multiple cameras and, most important, hundreds of thousands of apps. BlackBerry’s devices largely stayed the same, often with half-screens and a physical keyboard, and its initial attempts at touch-screen phones were technological failures. (Source:ET)