BlackBerry is taking further restructuring action, shedding 4,500 jobs as it attempts to make up for poor sales of BlackBerry 10 devices.
The Waterloo-based company made that announcement Friday afternoon saying in a statement that it anticipates a loss of between $950 million and $995 million in the second quarter of 2013.
Most of that loss comes from a massive writedown the company will take from poor sales of BlackBerry 10 smartphones.
The company expects second-quarter sales figures of 3.7 million, down from 7.4 million in the same quarter in 2012.
The restructuring effort was the major focus of the announcement, with the company saying it will cut its product line from six devices to four – two high-end products and two entry-level phones, aimed at business and professional customers.
BlackBerry expects the job cuts, which represent 40 per cent of its total workforce, to help it reduce its operating expenses by 50 per cent by 2015.
It was not clear how many of the cuts, which will leave the company with about 7,000 employees, would affect local workers.
“More intense competition” in the smartphone industry was cited by BlackBerry as the reason for this action.
“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,” BlackBerry president Thorsten Heins said in a news release.
“Going forward, we plan to refocus our offering on the end-to-end solution of hardware, software and services for enterprises and the productive, professional end user.”
Industry reaction was swift, with one analyst calling the move a “wholesale slaughter” and saying it doesn’t bode well for the smartphone maker’s future.
“There’s no good news in any of this,” said tech analyst Carmi Levy.
“The company that we’ve known and loved for so long will not exist in this form for much longer. This is not cutting at the edges. This is digging deep into the company and making it significantly smaller, because the size no longer supports the market.”
Local officials also expressed concern, but quickly suggested BlackBerry’s woes wouldn’t stop the momentum of Waterloo Region’s tech industry.
“While BlackBerry is the largest tree in the forest, there’s a thousand other trees,” said Communitech president Iain Klugman.
“It is always sad when are companies aren’t doing as well as we would hope, but I think it is encouraging to see that BlackBerry is willing to make the difficult decisions to ensure their long-term viability.”
Klugman said Communitech would work to keep as many of the affected local employees as possible in the area.
Waterloo Mayor Brenda Halloran offered similar sentiments.
“Our hearts go out to those people who will be affected,” she told CTV News.
“I think this community is strong, resilient, compassionate and caring, and we’re going to be there to support our friends, our family and our neighbours.”
BlackBerry’s newest device, the Z30 smartphone, goes on sale next week in the United Kingdom and Middle East, with the rest of the world – including Canada – seeing it in time for the holiday season.
An exact release date for Canada has not been announced.
BlackBerry will formally present its second quarter results next week.
Shares in BlackBerry fell more than 20 per cent in the first few minutes after trading resumed, but rebounded before the end of the trading day.
BlackBerry stock closed at $9.08 on the Toronto Stock Exchange, down 16 per cent from its opening price, and at $8.73 on the NASDAQ, down 17 per cent.
Trading of BlackBerry shares was halted on both exchanges for 35 minutes as the news broke.
BlackBerry was founded in Waterloo in 1984 as Research in Motion, and released its first BlackBerry wireless device in 1999.
With files from The Canadian Press
