BlackBerry to fire 4,500 employees as sales of new device plummet

The news comes as Apple released two new iPhones on Friday which analysts predict will sell 5m in the opening weekend

theguardian.com, Dominic Rushe in New York and Charles Arthur, Friday 20 September 2013

The struggling smartphone firm said it expects to lose nearly $1bn on
disappointing sales of a new device. Photograph: Mast Irham/EPA

BlackBerry confirmed it was firing 4,500 of its staff on Friday as the struggling smartphone firm said it expects to lose nearly $1bn in the three months to August on disappointing sales of new phones.

Revenues for the three months were only $1.6bn, the company said, against analysts' forecasts of $3bn – indicative of a collapse in its business after lacklustre sales of its new Z10 and Q10 phones. In all, it shipped 3.7m smartphones in the quarter, its lowest since summer 2007, when the first iPhone came out.

The company's shares crashed from $10.20 to $8.03 before recovering to $8.73, a 17% drop on the day, valuing it at $4.5bn. The shares were briefly suspended as rumours of the loss circulated, and it was forced to indicate its quarterly earnings a week ahead of their scheduled date. It said it would announce a loss of between $930m and $955m next week.

That brings its total losses in the past seven quarters to $1.8bn, putting its viability as a going concern into question.

The company announced it was putting itself up for sale at the end of August – which market observers took to indicate it had failed to find a buyer privately. Microsoft's acquisition of Nokia this month effectively left the Ontario-based company in the cold.

Though Canada's Fairfax Holdings is believed to be trying to put together a private equity buyout, others think it will be sold off piecemeal.

The company blamed the loss partly on "more intense competition" following poor sales of the Z10 and Q10, released in January and April.

Apple launched its two latest iPhones yesterday, which analysts were predicting could sell 5m in the opening weekend.

BlackBerry's firings follow the loss of 5,000 jobs last year and a smaller round of redundancies this summer. The new losses will reduce Blackberry's 12,700-plus global workforce by about 40%. Expenses will be cut by 50% by the end of the first quarter of 2015, the company said.

BlackBerry's share of the smartphone market has plummeted as Apple and devices from Samsung, HTC and others have taken its once sizeable lead.

BlackBerry had over 14% of the US smartphone market in 2011 but, according to research firm IDC, it now has under 3%. Once the market leader, it now trails in fourth place behind Microsoft's Windows Phone brand, devices powered by market leader Google's Android system and Apple, IDC says .

Thorsten Heins, the BlackBerry chief executive, told Bloomberg in April that the Q10 could sell "tens of millions". So far the figure appears to be below 5m.

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