BlackBerry Stock Continues To Lose Its Allure Amidst Latest Job Cuts

  • The Canadian telecommunication and wireless equipment company has recently announced job cuts in Ontario and Florida.
  • Currently in a period of transition, BlackBerry is looking to capitalize on growth opportunities. However, questions are being asked about the future of its operating system.
  • BlackBerry stock is far from a good buy at present, with financial figures reflecting this.

BlackBerry (NASDAQ:BBRY) doesn't seem to get out of its perennial slump. It was only a few years ago that the BlackBerry's smartphones were selling like hot cakes. Nearly every CEO and world leader used to go about their daily lives with BlackBerry handsets in their pockets. Times have certainly changed, however. After failing to remain competitive with companies such as Apple (NASDAQ:AAPL) and other android-operated phones, the company is now a “has-been”. This is not too difficult to tell anyway, as the company has been making annual losses for quite a while now, coupled with its miniscule market share.

In a recent statement, BlackBerry revealed that their headcount reduction process has impacted approximately 200 employees within Ontario and Florida. The company had 6,225 employees as of the 28th of February 2015. The business units said to have been depleted by this most recent job cut have not been officially identified. Although numerous reports are suggesting that the damage has been done in its smartphone business. Towards the end of the year 2013, current CEO John Chen replaced the outgoing Thorsten Heins. Since that time, the former has attempted to cut costs throughout the whole of the organisation’s operations, with the smartphone department appearing to be the most heavily hit.

On a more positive note, the company’s slow demise has served to create an unprecedented boom within the tech scene. Since the year 2011, BlackBerry has let go of approximately 10,000 employees, which is more than half of its entire workforce. Those who were regarded as the “cream of the crop” at BlackBerry have since gone ahead and started their own companies. More specifically, the likes of Vidyard, Freshbooks and Eleven-X come to mind. Others who left the Canadian-based company have simply gone on to transfer their expertise by working for companies such as Hootsuite, retail Software Company Shopify, Kitchener, as well as D2L.

BlackBerry is in a period of transition. It is seeking to capitalise on both new and existing growth opportunities with the aim of creating sustainable profitability across all areas of the business. It is peculiar, to say the least, as one would have thought that the company’s well-known operating system, BB OS, could be the turning point. Last year, the company was forced into an abrupt turn after the failure of BB10 but later the Canadian firm released the BlackBerry Priv, its flagship android smartphone.

Earlier, CEO John Chen reiterated the company’s commitment to the BlackBerry OS. Despite this, the company also announced the closure of its ‘Built for BlackBerry’ certification program, which assisted developers with the creation of native applications. The company’s senior director of product management, Damian Tay, all but confirmed BlackBerry’s switch to the Android operating system:

“The Priv device is essentially our transition to Android … The future is really Android. We went [there] essentially for its app ecosystem.”

In its Q3 fiscal 2016 results, BlackBerry’s revenue stood at $548 million, which is almost a 12% increase from the previous quarter. The result was the first quarter-to-quarter increase in revenue for the company in nine quarters. The increase was partly attributable to the company’s decreased reliance on hardware and its improved focus on software. The strategic change appeared to pay off, as the company’s software and service revenue accounted for $154 million of total revenue.  This was an increase from the $78 million made in the previous quarter.

Source: Market Realist

Even though software sales were very encouraging, the company is now regarded as a niche smartphone player. The company’s revenues have fallen by a staggering 34% year-over-year, as shown in the chart above.

Source: Market Realist

The company also made a profit for the first time in two years, as it announced a non-GAAP profit of $0.01 per share. However, it also reported that it continues to take a net loss on a GAAP basis. In the last quarter, it made a net GAAP loss of $0.28 per share.  In my opinion, this says it all. It demonstrates the firm’s inability to capitalise on its strengths and strong performance in an area of business. Additionally, BlackBerry stock price has generally been in a period of decline over the past year. I am still open to the fact that company fortunes could change, but the company is just taking its first steps in recovery. Ultimately, I am of the opinion that the BlackBerry stock is definitely one to avoid at present.

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Comments on this article and BBRY stock

user profile picture
One of the worst articles about Blackberry recently. When you concentrate your whole "analysis" on BB10 you show the world that you have absolutely no idea what you are talking about. The article is a good laugh, but a good investment advise? No way!
10 1 reply
user profile picture
re: In a recent statement, BlackBerry revealed that their headcount reduction process has impacted approximately 200 employees within Ontario and Florida.

Do you know how many they hired over the past 6 months?....I didnt think so. Headcount is likely up with acquisition of Good and 80 job openings posted on any given month.
1 reply
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