Profit warning pressures BlackBerry to break up

Michael Carroll
telecomasia.net
BlackBerry bosses seem bent on keeping the company together, detailing restructuring plans for the business despite predicting an operating loss of nearly a billion dollars for its fiscal 2Q14.
 
The Canadian smartphone vendor forecasts a loss in the range of $950 million to $995 million for the three months to end August, compared to an operating loss of $363 million in fiscal 2Q13. It predicts smartphone shipments will drop from 7.4 million in fiscal 2Q13 to 3.7 million in the current quarter.
 
BlackBerry’s plan is to cut staff and smartphone models in a bid to halve operating costs by end fiscal 1Q15 – the three months to end May 2014. Some 4,500 employees will go, as the firm focuses on sales to enterprise, and consumers who take their device to work. The vendor will also push its Enterprise Service 10 servers, predicting half of its fiscal 1Q14 revenue will come from that sector.
 
Thorsten Heins, president and chief executive officer of BlackBerry says the changes are “difficult, but necessary” to address the firm’s position in a “maturing and more competitive industry.” He notes the refocused company will be in line “with the customers that helped build BlackBerry.”
 
The bid to restructure comes as investors reportedly push for the company to be broken up and sold, which they believe would allow it to maximize the value of its services business and patent portfolio compared to selling the firm as a whole.
 
Analysts still predict a breakup of BlackBerry, noting a sale is now necessary to ensure continued support for the firm’s platforms, Reuters reports.
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