BlackBerry to slash 4,500 jobs as new devices fail to catch on

BlackBerry, the smartphone maker that is evaluating a sale, will cut 4,500 jobs and record an inventory writedown of as much as $960m (€710m) after a new set of devices failed to catch on with consumers.

The company, based in Waterloo, Ontario, expects to report a net operating loss of as much as $995m for the fiscal second quarter, according to a statement yesterday. Sales in the quarter were about $1.6bn — just more than half the $3.03bn average estimate of analysts surveyed by Bloomberg.

The company sold about 5.9m smartphones in the quarter, it said. BlackBerry had 12,700 employees as of the end of March, the last time it has reported a figure. The inventory writedown is mostly based on the value of Z10 touch-screen devices, the company said.

The adjusted second-quarter net loss will be as much as $265mn, or 51 cents a share, compared with the average analyst estimate of 16 cents.

Chief Executive Officer Thorsten Heins was counting on the new BlackBerry 10 phones — introduced in January to good reviews — to reverse a sales slide, return the company to profitability and make the brand hip again. Instead, its market share continues to slide and BlackBerry remains unprofitable. Corporate customers such as Morgan Stanley are holding off on upgrading to the new platform, concerned the company won’t be around to support the devices, people familiar with the matter said last month.

The writedown extends a streak of inventory charges, previously spurred in part by the ill-fated PlayBook tablet. The company took a pretax expense of $485m in December 2011, a second charge of $267m the following March and a third writedown of $335m in June 2012.

Still, BlackBerry continues to introduce new products. In addition to the Q10, Z10 and Q5 released so far this year, BlackBerry this week introduced the Z30, a model with the company’s largest screen yet. It goes on sale in the UK and Middle East next week.

BlackBerry has hired PricewaterhouseCoopers LLP to evaluate the firm for potential buyers, said people with knowledge of the move. A team of accountants and lawyers from the New York-based firm have been working at BlackBerry since August, said the people, who asked not to be identified, as the contract hasn’t been made public.