The once dominant BlackBerry smartphone company might have breathed its last breath. According to an article in the New York Times, they recently announced a layoff of 4500 of employees on top of an already 40 percent reduced work force. Additionally, word has leaked that the company is expected to report a $1 billion loss on its quarterly report as a result of unsold inventory and payments made to their supplier. The BlackBerry line of phones which used to boast 6 different phones is also going to be cut down to 4 phones.
The company temporarily put a stop to its trading amidst the dreary announcement. Where experts were expecting revenue to be at $3 billion, BlackBerry is currently expected to hit $1.6 billion. This is nearly half the projection. The sales for smartphones totaled 3.7 million with Apple claiming 31.2 million sales of their iPhone.
Probably the most concerning news from BlackBerry is that they reported using $500 million of their cash reserves to stay operating. This lowered their total cash holdings to $2.6 billion even though the company has been increasing its cash holdings. Shares in BlackBerry have decreased by 17 percent to $8.73.
Only four years ago BlackBerry controlled 51 percent of the smartphone market. This is a tremendous step down from where they use to be the leading cellphone producer and were synonymous to some degree with business phones. The major failure of BlackBerry can be attributed to their leadership which rejected the idea of a pocket sized computer. The design which was centered on a sleek touch screen was far from the BlackBerry design. Still, after trying to adopt the new touch screen design, BlackBerry failed. By the time BlackBerry was able to produce a viable contender, the market was already too saturated and brand preference already taken.
The only route Blackberry can take that will get them out of this rut is to invest heavily in R&D. The problem is that they don’t have sufficient funds to make a move this great. Their patents are also under question which puts them in a bad situation. Ultimately, This may mark the end of revolutionary cellphone giant.
Update: These moves appear to have been precursors to BlackBerry’s plan to sell to Canadian holding group, Fairfax Financial. A tentative agreement has been reached which if approved, will render BlackBerry a private company.
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