BlackBerry has confirmed rumors of massive job cuts, announcing 4,500 layoffs this afternoon, amid a lot of other terrible news. The suffering gadget maker halted its stock before dumping the pile of unfortunate information. In addition to the layoffs, the once-very-popular smartphone company announced early earnings for the second quarter of $1.6 billion, way, way below analyst expectations of $3.06 billion. It also posted a net loss of 13 cents a share, compared to the eight-cents-a-share profit analysts had predicted. In addition, the company announced it would cut back 50 percent of its corporate expenditures by 2015, which could lead to more layoffs.
During Friday's conference-call-of-doom BlackBerry blamed the losses on the "Venezuela effect." The company has lost $72 million in revenue because of foreign currency restrictions placed by the U.S. on Venezuela, where the BlackBerry has remained a popular phone, explains Fortune's Kevin Kelleher. When the currency gets devalued, BlackBerry loses money.
That's a real concern, but does not account for the majority of the revenue miss: BlackBerry phones just aren't popular anymore. Most of the loss is because of a write-off of unsold phones. While the world celebrated and bought Apple's new iPhones, BlackBerry announced a new phone to little fanfare. Even the most devoted of BlackBerry fans have to question the company's survival. Why invest in a company that won't be around in a year?
From this news alone, the shares — already at a seven-month low — are down 20 percent, as trading resumes.