BlackBerry executives bought a $20million private jet just months before troubled phone company sacked 4,500 employees and announced an incredible $1billion loss
- BlackBerry lost almost $1billion last quarter
- Revenues were just over half what experts predicted
- Phone group will now sack 40 percent of global workforce
- But company had a $20million private jet delivered in July and described it as a cost-cutting exercise
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Ailing phone group BlackBerry bought a private jet worth over $20 million just months before it laid off 4,500 workers and reported a nearly $1 billion second-quarter loss, it was revealed on Sunday.
Ill-timed executives had the second-hand Bombardier Global Express delivered in July and explained the decision as a cost-cutting exercise as the plane replaced two older aircraft.
But perhaps after a closer look at their accounts, the company announced on Sunday it will now sell the latest addition to their fleet and will no longer own any private jets.
Ill-timed: Blackberry bought a Bombardier Global private jet (as seen in this file photo), just months before the phone company sacked thousands and reported huge losses
'Several years ago, the company bought two medium-range Dassault aircraft,' BlackBerry said in a statement reported by the Financial Times.
'Earlier this year the company decided to sell both planes and replace them with one longer-range aircraft. The company considered several options and selected a used Bombardier aircraft, which was eventually delivered in July,' it continued.
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ShareThis ultra long-range jet can fly between Tokyo and New York without refueling. A used aircraft will typically cost between $20 - $30 million.
Blackberry said on Friday that it will lay off thousands of employees, or 40 per cent of its global workforce, as it reported a nearly $1 billion second-quarter loss a week earlier than expected.
Plush: The interior of a Bombardier Global Express XRS business jet looks comfortable and the plane can travel between New York and Tokyo without refueling. But Blackberry fired 4,500 employees on Friday
The stock dropped 23 per cent to $8.11 after reopening for trading. Shares had been halted earlier pending the news announced the same day rival Apple's latest iPhone models went on sale.
Sunday's statement on the private jet purchase added: 'In light of the company’s current business condition, the company has decided to sell that aircraft along with the two legacy aircraft and will no longer own any planes.'
BlackBerry had been scheduled to release earnings this week.
A SMOOTH RIDE
Bombardier Global Express 5000 specs:
Crew: Two - Three
Capacity: 8 in a typical configuration, up to 19 in high density arrangement
Length: 96.8 ft (29.5 m)
Wingspan: 94 ft 0 in (28.65 m)
Height: 25.5 ft (7.7 m)
Powerplant: 2 × Rolls-Royce BR710A2-20 turbofans
Cabin length: 42.47 f (12.94 m)
Cabin width (centerline): 8.17 ft (2.49 m)
Cabin height: 6.25 ft (1.91 m)
Maximum speed: Mach .89 (513 kt, 590 mph, 950 km/h)
Cruise speed: Mach .85 (488 kt, 562 mph, 904 km/h)
Range: 5,200 nm (9,360 km)
Data from Bombardier
But the Canadian company said late Friday afternoon that it expects to post a staggering loss of $950 million to $995 million for the quarter, including a massive write down of the value of its inventory due to increasing competition.
Revenue of $1.6 billion is only about half of the $3 billion that analysts expected, according to FactSet.
The company's expected adjusted loss of 47 cents to 51 cents per share falls far below the loss of 16 cents per share projected by Wall Street.
BlackBerry said it wants to slash operating costs in half by the first quarter of 2015 so cutting its global headcount to 7,000 total employees is necessary.
'We are implementing the difficult, but necessary operational changes announced today to address our position in a maturing and more competitive industry, and to drive the company toward profitability.' Thorsten Heins, President and CEO of BlackBerry, said in a statement.
The BlackBerry, pioneered in 1999, was the dominant smartphone for on-the-go business people and other customers before Apple debuted the iPhone in 2007.
Axed: Blackberry President and CEO Thorsten Heins, pictured, attempted to boost the Canadian firm's poor sales over the past year through a series of releases, including the Q10, pictured. But it wasn't enough.
Since then, BlackBerry Ltd. has been hammered by competition from the iPhone as well as Android-based rivals like Samsung.
The iPhone 5S and iPhone 5C, Apple's latest and greatest, went on sale earlier Friday, flying off shelves at a record pace.
Since 2007, BlackBerry has lost 93 per cent of its market share, with half going in the past year alone
Marked by the usual lines around the block and triumphant Apple fans walking out of Apple Stores to cheers, the new models received rave reviews from consumers and media alike.
The most-hyped new feature on the 5S is a new fingerprint sensor used to unlock the phone, making passwords and finger swipes 'a waste of time.'
It also comes with an improved camera and a faster processor. It has sold out around the world, say reports.
In January, Blackberry unveiled new phones running a revamped operating system called BlackBerry 10.
The Z10 and Q10 were designed to better compete for customers and rejuvenate the brand. But vendor marketing was uneven and BlackBerry's market share continues to lag its rivals.
BlackBerry said last month that it would consider selling itself. The Waterloo, Ontario-based company reiterated Friday that a special committee of its board of directors continues to evaluate all options.
It also seemed to say that it would shift its focus back to competing mainly for the business customers most loyal to its brand.
'Going forward, we plan to refocus our offering on our end-to-end solution of hardware, software and services for enterprises and the productive, professional end user,' said Heins.
'This puts us squarely on target with the customers that helped build BlackBerry into the leading brand today for enterprise security, manageability and reliability.'
Not an iPhone killer: New Blackberry models have failed to impress ever-more choosy consumers flocking to Apple and Android devices
A stark contrast to the hype surrounding every iPhone launch, Blackberry's last new model dropped with a thud. Despite a massive advertising push and aggressive in-store sales tactics, the Z10 fell flat - despite rave reviews from the tech press.
Blackberry's once leading market share has been eroded by both Apple and Samsung. Though there haven't been many lines for Samsung products, the South Korean electronics giant sells more smartphones than any other phone manufacturer - android or otherwise.
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