Blackberry job cuts: After the launch of the Z30 smartphone in Malaysia on Wednesday, news about BlackBerry Ltd (NASDAQ:BBRY) flooded the media. However, most articles weren’t about the new device, but about rumors (quite certain, it seems) of the company preparing to fire up to 40% of its employees by the end of the year. Layoffs will come in waves and will affect every department in the firm.
However, this should come as no surprise for those following BlackBerry’s steps. Amidst sluggish sales for its last smartphone suite and financial difficulties, The Wall Street Journal “reported [earlier this month] that BlackBerry plans to run a fast auction process that could be wrapped up in a few months, following on the company’s announcement in August that it formed a special committee to ‘explore strategic alternatives.’”
Although some hoped that the launch of the Z30 phone would shift investors’ focus of attention away from a potential buyout, and back to actual business and its results, this doesn’t seem to be the case. Actually, the market doesn’t seem to believe in Z30’s potential, as BlackBerry’s stock price fell after the presentation. And, although the drop was somewhat contained by the Fed’s announcement that it would hold off on lessening bond purchases, keeping its easy-money program in place, Wednesday closed with BlackBerry’s stock at $10.40, down almost 1.5%.
As the company’s market share shrinks, cost cutting initiatives –as these layoffs- should help it ameliorate its margins. Actually, the layoffs began last year, affecting 5,000 employees, and continued earlier this summer, mostly hitting the sales and research-and-development divisions. This, added to the closing of several manufacturing facilities meant about $1 billion worth of savings last year. However, the real hope for this company, I believe, stems on a bigger competitor acquiring it quickly, before it loses any more of its value.
Bound to report its quarterly results next week, BlackBerry’s prospects look quite uncertain. Although the company’s spokesman, Adam Emery, refused to comment on “rumors and speculation,” several internal sources and employees have confirmed BlackBerry job cuts, and a buyout now seems more likely than ever.
Disclosure: Javier Hasse holds no position in any stocks mentioned