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BlackBerry plans to reduce smartphone portfolio and layoff 4,500 employees
Posted on 21-Sep-2013 08:18. | Tags Filed under: News.

BlackBerry has announced preliminary financial results for the three months ended August 31, 2013 and provided an update on business operations.

The Company currently expects to report revenue for the second quarter of approximately US$1.6 billion, of which approximately 50% is expected to be service revenue. For the second quarter, the Company expects to recognize hardware revenue on approximately 3.7 million BlackBerry smartphones.

Most of the units recognized are BlackBerry 7 devices, in part because certain BlackBerry 10 devices that were shipped in the quarter will not be recognized until those devices are sold through to end customers. During the second quarter, approximately 5.9 million BlackBerry smartphones were sold through to end customers, which included shipments made prior to the second quarter and which reduced the Company's inventory in channel.

As a consequence of the more intense competition the Company is experiencing in its hardware business, it expects to report a primarily non-cash, pre-tax charge against inventory and supply commitments in the second quarter of approximately US$930 million to US$960 million, which is primarily attributable to BlackBerry Z10 devices.

The current quarter will also include a pre-tax restructuring charge in the approximate amount of US$72 million reflecting ongoing cost efficiency initiatives.

As previously disclosed, the Company anticipated generating an operating loss in the second quarter. The Company currently expects that its adjusted net loss, before giving effect to the inventory and restructuring provisions referred to above, will be in a range of approximately US$250 million to US$265 million.

Including the inventory and restructuring provisions, the GAAP net loss is expected to be approximately US$950 million to US$995 million.

At the end of the second quarter, total cash, cash equivalents and investments is estimated to be approximately $2.6 billion. The Company has no debt.

As part of the Company's focus on enhancing its financial results, and in response to the increasing competition in the smartphone market, BlackBerry also announced plans to transition its future smartphone portfolio from six devices to four. 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.

With the launch of the BlackBerry Z30, the next generation high-tier smartphone built on the BlackBerry 10 platform, the Company will re-tier the BlackBerry Z10 smartphone to make it available to a broader, entry-level audience.

At the same time, the Special Committee of the Company's Board of Directors continues to evaluate all strategic alternatives for the Company, which some analysts say could even include a private sale.

Furthermore, the Company also announced that it is targeting an approximate 50% reduction in operating expenditures by the end of the first quarter of Fiscal 2015. As part of this, BlackBerry will implement a workforce reduction of approximately 4,500 positions or approximately 40% of the Company's global workforce resulting in a total workforce of approximately 7,000 full-time global employees.

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