Things are looking incredibly grim for BlackBerry today as it announced preliminary results of its Q2 2014 financial period which ended in August 2013. The company is facing massive job cuts, high levels of unsold inventory, a billion dollar loss, and it will be leaving the mass consumer market as it repositions itself as an enterprise device and services provider.
The company sold 5.9 million devices in the August quarter, will take a hit of USD 995 million in losses in most part due to unsold inventory, and cutting down from six planned phones to just four, as well as cutting 4500 jobs across the world. it also expects to report revenue of just USD 1.6 billion, barely half of the $3.1 billion that market analysts had expected.
In March of this year, the company had up to 12,700 employees, which was already reduced from over 17,000 near the end of 2012. The company in its statement to the public said that the 4500 job cuts around the world will leave the company with 7000 people which means the company lost around 1200 jobs between March and September 2013. This puts the company headcount back to its pre-2010 levels.
BlackBerry’s full touch screen Z10 model which debuted in early 2013 didn’t exactly set the world on fire. The company stated that while it sold 5.9 million devices in the three months to August, it will only recognize revenue from 3.7 million devices, most of which are BlackBerry 7 devices. This spells trouble for the company which had been counting on the results of its BlackBerry 10 devices.
At the beginning of the year, BlackBerry had planned to release six phones this year which includes the Z10, Q10, Q5 and the just released Z30. The company had also announced the 9720 in August, a BlackBerry 7 device intended for Europe, Latin America, and Asia.
With five devices already announced, the company did not say which of them will be given the axe as the company will only focus on four although it may abandon the 9720 from the looks of things. “The portfolio will focus on enterprise and prosumer-centric targeted devices including 2 high end devices and 2 entry level devices in all touch and QWERTY models”, the company said in its statement.
Following the announcement of the 5-inch full touch Z30, BlackBerry will reposition the Z10 as an entry level device. In other words, the Z10 may well end up as the full touch counterpart to the Q5 while The Q10 remains as the high end QWERTY phone. The 9720, being a fully consumer oriented device, does not fall into the categories described above.
BlackBerry CEO Thorsten Heins said in the release, “we are implementing the difficult but necessary operational changes announced today to address our position in the maturing and more competitive industry, and to drive the company toward profitability”.
BlackBerry did make its name in the enterprise business before the days of the iPhone and Android phones set in which began in 2007. Apple’s and Google’s march to the forefront of the mobile market drove the consumerization of mobile devices in the workplace and pushed BlackBerry aside.
Focusing on the enterprise means BlackBerry may end up ditching its strong consumer markets such as the UK and Indonesia, which have helped the company to stay afloat. On the other hand, the company’s push towards BlackBerry 10 hasn’t earned the company many friends. BlackBerry’s die hard fans are still beholden to its older products and have mostly stayed away from its current offerings.
Perhaps the only high point of the company’s announcement was the enterprise server business which as of this year caters to managing iOS and Android devices as well. The unit reported an increase from 19,000 installs in July 2013 to 25,000 at the end of August. This, along with the imminent deployment of BlackBerry Messenger for iOS and Android this weekend may end up serving as the core of the future of the company.
BlackBerry has yet to make a decision on its future with regards to the potential sale or break up of the company as it continues to explore possibilities.
