WATERLOO (dpa-AFX) - Shares of BlackBerry Ltd. (BBRY, BB.TO) plummeted near 16 percent after the smartphone maker on Friday said it expects to incur a steeper-than-expected loss for the second quarter, as tepid demand for its much-hyped BlackBerry Z10 smartphone led to hefty inventory charges.
The beleaguered Canadian smartphone maker said it plans to cut about 4,500 jobs - about 40 percent of its workforce - and aims to almost halve its operating costs by end of the first quarter of 2015, even as it continues to seek strategic alternatives.
'We are implementing the difficult, but necessary operational changes announced today to address our position in a maturing and more competitive industry,' said CEO Thorsten Heins.
BlackBerry expects a second-quarter loss of $950 million to $995 million, or $1.81 to $1.90 per share.
The loss includes non-cash, pre-tax inventory charge of about $930 million to $960 million, and a pre-tax restructuring charge of $72 million.
Excluding items, second-quarter adjusted loss is expected between $250 million and $265 million, or $0.47 - $0.51 per share.
On average, 35 analysts polled by Thomson Reuters currently expect a loss of $0.15 per share for the quarter. Analysts' estimates typically exclude special items.
The company expects second-quarter revenue of about $1.6 billion, with services accounting for half of that. Analysts currently expect revenue of $3.06 billion for the quarter.
Highly competitive business conditions and mute consumer demand for its euphoric device launches earlier in the year have proved to be a bane for BlackBerry. The company's smartphone clocked sales of about $3.7 million in the second quarter, mostly from BlackBerry 7 devices. BlackBerry sold 5.9 million smartphones, down from 6.8 million phones in the sequential first quarter.
BlackBerry said it will cut its smartphone portfolio from 6 devices to 4, including 2 high-end devices. With the imminent launch of its Z30, BlackBerry will re-tier the Z10 smartphone to make it available to a broader, entry-level segment.
The company will refocus on enterprise and prosumer market, offering end-to-end solutions, including hardware and software.
Once a pioneer in the smartphone segment, BlackBerry ran into hard times after Apple Inc.'s (AAPL) iPhones and devices running on Google Inc.'s (GOOG) Android platform grabbed the market.
The company's launch of the BlackBerry10 operating system in January was a dampener and sales of two LTE-enabled smartphones released earlier in the year - the all-touch screen Z10 and keyboard equipped Q10 - were disappointing.
Recently, BlackBerry was reported to have been planning a sale of itself by November. This comes at a time Microsoft Corp. (MSFT) agreed to buy the handset unit of Nokia Corp. (NOK) for $7.2 billion. Microsoft was seen as a potential buyer of BlackBerry.
BlackBerry, at the end of the second quarter, had total cash, cash equivalents and investments of about $2.6 billion. The company has no debt.
The company is set to release its detailed financial results for the second quarter on September 27.
BlackBerry shares closed Friday at $8.73, down $1.80 or 17.06%, on a volume of 68.3 million shares on the Nasdaq. In after hours, the stock gained $0.01 or 0.17%.
In Canada, its shares closed at C$8.98, down C$1.84 or 17.01%, on a volume of 7.3 million shares.
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© 2013 AFX News
