After announcing an anticipated loss of $995 million dollars in the second quarter, Blackberry announced plans to cut its global workforce by 4,500 or 40%. In August, the company said it was considering a sale, leading to speculation that earnings results would be unfavorable. Following the statement of the expected grim financial results, shares of the stock temporarily ceased trading, closing at $8.73, down $1.80 or 17%. In a statement, Thorstein Heins, Blackberry’s chief executive said, “We are implementing the difficult, but necessary operational changes announced today to address our position in a maturing and more competitive industry, and to drive the company toward profitability.” He continued, “Going forward, we plan to refocus our offering on our end-to-end solution of hardware, software and services for enterprises and the productive, professional end-user.” The company said its large loss can be primarily attributed to disappointing sales of its Z-10 model Smartphone. The touchscreen phone, developed to compete with Apple’s i-Phone and Samsung’s’ Galaxy S4, was not able to capture customers loyal to either company or current Blackberry users. Many Blackberry customers simply held on to their old devices. In June, Heins said only 2.7 million of 6.8 million Z-10 phones had been shipped.
The Blackberry Z-10 is a very competent smart phone that simply didn’t find its audience. Blackberry devices have always been business smart phones that double as entertainment gadgets and the other phones are entertainment gadgets that double as business smart phones. The company was never able to exploit that advantage. Blackberry could have and should have captured a larger and more loyal audience but the company consistently trailed its competition in innovation. And in a world that is driven by innovative technology, it simply could not compete with its competition, a sure-fire recipe for failure. The company may not be headed for Bankruptcy court in the immediate future but unless another direction can be found, the future is bleak. Blackberry’s only real strength at this point, is its cache of patents, which could prove attractive to potential buyers.