BlackBerry's 5,000 looming layoffs eclipse launch of new smartphone

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The launch of what could be the last new phone released by BlackBerry Ltd. as a public company has been overshadowed by a looming round of layoffs at the once-leading technology giant.

With little fanfare, BlackBerry announced a new flagship smartphone – the Z30 – and a new version of its BlackBerry 10 operating system on Wednesday.

But even as it continues to release new devices, BlackBerry is also quietly cutting various parts of its work force, as it tries to slash costs and make itself more appealing to possible bidders for all or parts of the company.

"The Z30 is a nice little device for the BlackBerry enthusiast," said Ronald Gruia, director at Frost & Sullivan. "But let's face it, it's no big secret the company is exploring its strategic alternatives, to use their own lingo." And that includes job cutting.

Mr. Gruia noted the company has recently been quietly laying off staff. "I wish I could be optimistic, but I have to be a realist."

Sources close to BlackBerry told the Globe and Mail the company is targeting job cuts of up to 5,000 employees, or close to 40 per cent of its global employee count of 12,000 people, between now and the end of its fiscal year in late February or early March 2014. The cuts are expected to be broad-based, in terms of both functions and geography, although the Waterloo, Ont., area – where BlackBerry is based – is expected to take the biggest hit in sheer numbers.

A BlackBerry spokeswoman refused to comment on what she called "rumours and speculation," but added that "organizational moves will continue to occur to ensure we have the right people in the right roles to drive new opportunities in mobile computing."

As of March, BlackBerry reported a total work force of 12,700. The company had already cut thousands of jobs in previous downsizings, as BlackBerry rapidly lost smartphone sales and market share to the Apple iPhone and devices powered by Google's Android operating system.

Renewed uncertainty about BlackBerry overshadowed the announcement of the new device. The company's shares sagged more than 2 per cent as the broad market rallied sharply.

Last month, BlackBerry announced a plan to "explore strategic alternatives" that include possible joint ventures, partnerships or a sale of the company.

In addition to the Z30, BlackBerry said Wednesday it will make BlackBerry Messenger – one of the company's best-loved and previously exclusive features – available on phones powered by Google's Android and Apple's iOS operating systems starting this weekend.

Sporting a 5-inch screen and multiple software enhancements, the Z30 is the fourth smartphone released by BlackBerry this year as part of the BlackBerry 10 line of mobile devices. With free productivity tools such as document-editing software built-in, the Z30 is aimed in part at BlackBerry's core users.

"It's still a very familiar message for us, in that BlackBerry is all about productivity," BlackBerry product manager Michael Clewley said. "We can do all those fun and great things but we're really focused on productivity."

After several delays, the first BlackBerry 10 phones hit the market in the first half of this year to generally weak sales, especially in North America.

According to Kaan Yigit, president of Solutions Research Group, BlackBerry's market share in Canada fell below 20 per cent for the first time in the second quarter of this year – down to roughly half its share from just two years ago. And less than one in five BlackBerrys in Canada are new BlackBerry 10 devices.

"[The Z30] is probably just fine … but too many consumers have already seen enough negative reviews and stories that they are abandoning the BlackBerry brand at a higher rate than before."

From a marketing standpoint, the new phone arrives at a challenging time – BlackBerry announced the Z30 on the same day Apple lifted its embargo for reviews of the new iPhone 5S and 5C smartphones. In addition, Wednesday also marked the release date for the new version of Apple's iOS operating system. As such, almost every major U.S. technology media outlet led its coverage with news about Apple, rather than BlackBerry, devices. Indeed, as of Wednesday afternoon, The New York Times technology site carried no mention of the new BlackBerry phone.

Next week, investors will get a sense of how BlackBerry is faring in the current market, as the company releases its latest quarterly earnings. But some analysts are no longer confident the Z30 – or indeed any device – can help the company now.

"It's painful, painful," Mr. Yigit said. "[I] don't want to be a grave dancer here, but no – last one out, turn off the lights, sadly."

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TALE OF THE TAPE

Next week, BlackBerry releases its newest flagship phone, the Z30. The touchscreen phone carries many upgrades over its predecessor, the Z10, released earlier this year.

Screen

Z30: 5-inch display

Z10: 4.2-inch display

Processor

Z30: 1.7-gigahertz dual-core processor with quad-core graphics processor

Z10: 1.5-gigahertz dual-core processor

Operating system

Z30: BlackBerry 10.2

Z10: BlackBerry 10.1 (will be upgraded to 10.2 in mid-October)

Battery

Z30: 2880mAh non-removable battery

Z10: 1800mAh removable battery

Memory

Z30: 2 gigabytes RAM, 16 gigabytes flash memory and an SD card slot (unchanged).

Z10: 2 gigabytes RAM, 16 gigabytes flash memory and an SD card slot

Omar El Akkad