In line with its cost-cutting initiatives, Canadian handset manufacturer BlackBerry Limited BBRY recently announced its decision to retrench workers on a worldwide scale. However, the number of employees to be laid off has not been disclosed.
A persistent decline in smartphone sales coupled with wide losses have compelled the company to plan job cuts on a wide scale. At present, BlackBerry employs around 6,225 staff globally. Last month, the company announced intentions of pulling down shutters on its Sweden office, which may lead to 100 layoffs.
Earlier, BlackBerry had reported its financial numbers for the fourth quarter of 2015, wherein operating expenses declined 61.1% from the last-year quarter. The company exited the quarter with nearly $2.89 billion of cash and marketable securities. Meanwhile, such massive job cuts will help the company to lower operating costs as well as generate savings. Moreover, the lay-off strategy will allow the company to achieve its previously set guidance of generating positive free cash flow in fiscal 2016.
Ever since Apple Inc.’s AAPL iPhone hit the market, BlackBerry and Nokia Corp. NOK have been facing intense competitive pressure. The situation worsened with the launch of Google Inc.’s GOOG Android software, which was an instant hit as well.
In the fourth quarter of 2015, BlackBerry sold 1.6 million smartphones against 3.4 million in the same period last year. The count stands significantly below Samsung and Apple’s 82.4 and 61.2 million smartphone sales, respectively, for the same period. At the end of the first quarter of 2015, BlackBerry held a mere 0.3% market share against Android and iOS’s strong 78% and 18.3%, respectively.
Lately, BlackBerry has been exploring several alternate business options which should help the company offset escalating losses in its smartphone business. Also, BlackBerry’s BES12 platform is increasingly gaining traction.
A strong cash position has also encouraged the company to acquire WatchDox, a data security company which delivers secure enterprise file-sync-and-share (EFSS) solutions on any device. The company completed the acquisition of Secusmart, a leader in high-security voice and text encryption. The company also wrapped up the takeover of Movirtu, a provider of virtual SIM solutions.
However, we believe that such large-scale layoffs are just a temporary solution and will have a minimal impact on the company’s bottom line.
BlackBerry currently has a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment