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BlackBerry warns of big loss, to cut 4,500 jobs

BlackBerry warns of big loss, to cut 4,500 jobs

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Toronto:

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 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's iPhone and Samsung Electronics Co Ltd's Galaxy phones, said it expects to report a net operating loss of about $950 million to $995 million for the quarter ended August 31, due to write-downs and other factors.

The results will put more pressure on BlackBerry to find a buyer. The company 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. What do you expect when you announce you're up for sale?" said BGC Partners analyst Colin Gillis. "Who wants to commit to a platform that could possibly be shut down?"

BlackBerry's Toronto-listed shares fell 23.3 per cent to C$8.34, hitting their lowest point so far this year, while the company's Nasdaq-listed shares fell 23 per cent to $8.10.

The Waterloo, Ontario-based company said it expects that 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 per share.

BlackBerry said it expects to report revenue for the second quarter of about $1.6 billion, of which roughly 50 per cent 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.

"The revenue and device shipment numbers are pretty surprising given how weak it is," said UBS analyst Amitabh 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, said it 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.

The company said it plans to refocus its efforts on the enterprise and high-end consumer markets, offering end-to-end solutions, including hardware, software and services.

Copyright @ Thomson Reuters 2013

Story first published on: September 21, 2013 01:57 (IST)

Tags: BlackBerry Ltd, Job cuts

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