BlackBerry shares plunged 20% late Friday afternoon as the company announced plans to fire 40% of its employees and eventually cut expenditures in half over the next nine months. The actions were in response to the company's warning of a collapse in second fiscal quarter earnings.
The company said quarterly revenues were expected to be about $1.6 billion. Yet Wall Street had been expecting over $3 billion. It also said that the quarter's GAAP net operating loss would nearly $1 billion.
Nasdaq halted trading on the BBRY shares about 35 minutes before the preliminary figures were officially announced. When trading resumed, shares plunged 20% to $8.72.
A statement by CEO Thorsten Heins suggested BlackBerry is all but abandoning the consumer smartphone market.
"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," Heins said. "This puts us squarely on target with the customers that helped build BlackBerry into the leading brand today for enterprise security, manageability and reliability."
During the quarter, about 5.9 million BlackBerry smartphones were sold through to end customers. BlackBerry didn't break out how many were based on the new BlackBerry 10 operating system and how many were based on the prior OS platform.
The marketplace failure of its BlackBerry Z10 touch smartphone was underlined in a massive charge against inventory. BlackBerry said it will "report a primarily non-cash, pre-tax charge against inventory and supply commitments in the second quarter of approximately $930 million to $960 million, which is primarily attributable to BlackBerry Z10 devices."
BlackBerry also said it's changing its smartphone lineup to focus on "enterprise and prosumer-centric targeted devices, including two high-end devices and two entry-level devices in all-touch and QWERTY models." The Z10 will target "a broader, entry-level audience."
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