But after being upstaged time and again by industry rivals, the devices may soon remain only in memories.
On Friday, BlackBerry announced that it would lay off 4,500 employees, or nearly 40 percent of its already reduced work force. The cut is so deep some analysts and investors said that the company’s days as a smartphone maker were effectively over.
The company also said that it expected to
report a quarterly loss of nearly $1 billion next week, mainly the result of a write-off of unsold BlackBerry phones, but also because of payments to stop manufacturers and suppliers from adding to the pile. And of its six phones that the company offers, two will be discontinued.
“This is a recognition that they lost the handset war,” said James H. Gellert, the chairman and chief executive of
Rapid Ratings, an investment risk evaluation firm. “It’s certainly a waving of the big, white towel.”
The company halted the trading of its shares to make the bleak announcement. It also said that revenue was expected to have been $1.6 billion in the second quarter, almost half of the $3 billion analysts had anticipated. Sales of phones during that time, it said, totaled 3.7 million. Apple, by comparison, sold 31.2 million iPhones during its last quarter.
More alarming to many analysts was BlackBerry’s announcement that it had used about $500 million in cash to stay operating during the last quarter, lowering its cash holdings to $2.6 billion. Although the company has been losing market share for several years, it had managed to increase its cash holdings.
Shares in the company tumbled 17 percent for the day, to $8.73, nearly all of it after trading was resumed.
Four years ago, BlackBerry had 51 percent of the North American smartphone market, according to the research firm
Gartner. But the fast-changing industry, and in particular phones from Apple and Samsung, left the company behind.
“The rest of the smartphone world is racing ahead at top speed while we have BlackBerry stuttering to a stop,” said Michael Gikas, the senior editor for electronics at Consumer Reports.
BlackBerry’s executives initially looked down on the move to making smartphones into pocket-size computers, which was pioneered by Apple’s iPhone. But consumers preferred smartphones with full touch screens, multiple cameras and, most important, hundreds of thousands of apps. BlackBerry’s devices largely stayed the same, often with half-screens and a physical keyboard, and its initial attempts at touch-screen phones were technological failures.
In January, the company introduced the BlackBerry 10 line of phones, which were based around an entirely new operating system of the same name and offered hardware features that were similar to devices from the market leaders.
But the new devices were unable to break the grip of Apple and Samsung. When the
latest flagship phone in the line, the Z30, was announced this week, it caused hardly a ripple. Even BlackBerry seemed to have given up. Unlike with other phones in the series, the Z30 release came without any kind of public or flashy demonstration.
The failure of the BlackBerry 10 line of phones quickly led to speculation that the company, like Palm before it, would be broken apart and perhaps gradually disappear, at best lingering as little more than a brand name. This summer, BlackBerry announced that it was undertaking its second strategic review in less than a year. Unlike with the earlier one, however, BlackBerry’s executives did not rule out a sale of the company.
All of the uncertainty surrounding the company, several analysts said, probably made the company’s problems even worse during the last quarter. Corporate and government information technology departments have held back on committing to BlackBerry 10 phones and, more important for BlackBerry, the corporate server software that supports them.
Consumers are often less sensitive to corporate problems. But Keith Lam, a managing partner at Red Sky Capital Management in Toronto, said that carriers appeared to be cutting back their BlackBerry 10 inventory to avoid being saddled with unwanted phones and reducing display space and promotions for the devices in stores.
“From that it kind of snowballs downward for BlackBerry,” said Mr. Lam, whose firm does not manage any BlackBerry shares.
If, as many expect, BlackBerry is no longer in the handset business, the question becomes what remains of value to a potential investor.
Mike Lazaridis, the co-founder of BlackBerry who stepped down as co-chief executive in 2011, has contacted private equity firms about a possible bid for the troubled company. But a private company would be up against some of the largest companies in the world, like Apple.
Even before Friday, many analysts had declared BlackBerry’s hardware business to be worthless. There is no clear consensus, however, on the value of its other assets.
BlackBerry owns a secure global network that once provided it with a selling point for customers seeking security. But that highly centralized network is prone to occasional failures, is based on aging technology and has had its role reduced under BlackBerry 10.
The value of the company’s patents, many of which it holds in partnerships with other technology companies, is also uncertain. The layoffs also suggest that BlackBerry will be forced to give up most of its research and development work, further clouding its value.
“The biggest problem is that they won’t have money for R.&D. and that’s death for a tech company,” said Neeraj Monga an analyst at Veritas Investment Research in Toronto. “It’s not like Coca-Cola, which has been able to bottle the same formula for over 100 years.”
