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BlackBerry increases provision for restructuring charges

BlackBerry increases provision for restructuring charges

The expected charges have grown from US$100 million to $400 million, BlackBerry said in a filing with the SEC

BlackBerry has increased the amount it plans to spend on its ongoing cost-cutting program, and extended it by another three months, the company said in a filing with the U.S. Securities and Exchange Commission on Tuesday.

The company revealed more details of its recovery plan in the filing, and of its gloomy second fiscal quarter which ended Aug. 31.

It had previously expected its "cost optimization and resource efficiency" (CORE) program to result in $100 million in pre-tax charges during its 2014 fiscal year, ending Feb. 28, 2014, but now expects to make charges of $400 million through May 31, 2014.

The company had previously announced plans to lay off around 4,500 workers, a move it confirmed in the filing. It also plans to cut to the number of phone models it sells from six to four: two high-end and two entry-level phones aimed at the enterprise and "prosumer" market.

BlackBerry confirmed a US$965 million net operating loss in its second fiscal quarter on Friday, following low interest in the Z10 smartphone. Revenue dropped by 45 percent to approximately $1.6 billion from the same period a year earlier.

Almost two months have now passed since Blackberry's board of directors formed a committee to explore strategic alternatives for the future of the company. That process resulted in an offer to buy the company and take it private from Fairfax Financial Holdings, whose due diligence is expected to be complete by Nov. 4, according to the filing.

BlackBerry believes uncertainty surrounding this process may have negatively impacted demand for the Company's products during the second quarter, the filing said.

However, doubts about BlackBerry's future aren't going away any time soon, according to Geoff Blaber, director of devices and platforms at CCS Insight. The biggest element of uncertainty is what the new private company will become, Blaber said in an interview on Friday. His bet is it will be an enterprise service company, and devices are unlikely to be a part of that.

Send news tips and comments to mikael_ricknas@idg.com


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