Following another round of massive layoffs, what's next for BlackBerry?
Published Saturday, September 21, 2013 8:31AM EDT
Last Updated Saturday, September 21, 2013 10:14PM EDT
News that BlackBerry would be cutting 4,500 jobs has many questioning the future of the struggling Waterloo, Ont., company.
The Canadian tech darling announced Friday it expects to post a loss of between US$950 million and $995 million when it reports its second-quarter earnings next week.
The company says layoffs, which will affect 40 per cent of its global workforce, will help BlackBerry cut its operating costs in half by the end of May 2014.
But tech and business analysts say this could spell the beginning of the end for BlackBerry.
Marvin Ryder, marketing professor at McMaster University, says that with disappointing global sales for BlackBerry’s recently released Z10, Q10 and Q5 smartphones, the company has hit a wall.
“Consumers aren’t buying them in any kind of quantity,” he told CTV News Channel Saturday. “You want to restructure, but to what? If you just don’t have anything people want – there’s no place to go.”
Ryder said while the company is not on the verge of bankruptcy at this point, it has stalled.
“In a high-technology industry, you have to innovate or die,” he said. “They gave up the high ground, and once you give it up, it’s almost impossible to get it back.”
Local job impact
Last year, the company made another equally devastating round of cuts to its staff, when it announced plans to lay off about 5,000 workers in an effort to save $1 billion across its operations.
Chief executive Thorsten Heins called the latest announcement a "difficult, but necessary change."
He said the company will refocus on professional smartphone users as it moves ahead with his three-stage plan intended to return BlackBerry to profitability.
"This puts us squarely on target with the customers that helped build BlackBerry into the leading brand today for enterprise security, manageability and reliability," Heins said in a statement.
The latest losses will leave about 7,000 employees at BlackBerry. At its peak, the once-tech giant had close to 20,000 employees.
The majority of the latest job cuts are expected to hit BlackBerry’s Waterloo-based headquarters.
Waterloo Mayor Brenda Halloran says while those affected by the latest round of layoffs will find themselves in "difficult situations," she's hopeful the city can rebound.
"This is just one company within a very large, diverse sector of Waterloo Region," Holloran told CTV Kitchener on Friday.
"Yes, there will be difficult situations for the people affected, but for our community, as a whole, we're doing very well," Holloran said.
John Stix, a Waterloo tech entrepreneur and creator of Fibernetics Corp., said he hopes the jobs will get reabsorbed into region's thriving tech community.
"What's happened is unfortunate," Stix told CTV Kitchener. "But what RIM also did was provide a great platform to inspire entrepreneurs for the future, they've been a real leader in our community."
Stix added that Fibernetics Corp. is hiring and he knows a lot of companies in the area that are also recruiting.
Bardia Khosravi, a Waterloo-based software architect, said he is excited about possible innovations that could come as a result of BlackBerry's job cuts.
"They are all smart people very creative and very innovative. I'm really hoping that they come out of there and use all that power and passion and build awesome products," Khosravi said.
Meanwhile, the Ontario government responded to news of the layoffs by committing more to an initiative to connect former BlackBerry employees with other IT sector jobs.
The province announced Saturday it has extended the contract of Waterloo-based employment centre 'Tech Jobs Connx'.
BBM for Android, iPhone pushed back
As many questions remain about its future, BlackBerry has also paused plans to make its popular BlackBerry Messenger chat application available for Android and iPhone users after an unreleased version of the BBM for Android app was leaked online.
“Consequently, this unreleased version caused issues, which we have attempted to address throughout the day” BlackBerry announced on its official blog.
With files from CTV Kitchener and The Canadian Press