The stock price of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) was hit by reports that it cut its workforce by more than 50 percent. The stock plummeted as low as $11.53 per share yesterday, and the negative impact continues to affect the company today. BlackBerry is trading around $10.90 per share, down by more than 5 percent at around 2:30 this afternoon in New York.
BlackBerry denies job cuts
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) denied the reported job cuts. The Canadian smartphone manufacturer’s senior manager of corporate communications, Lisette Kwong said, "We did not cut half of our sales force,” in an e-mail to IBD.
Kwong added that BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is moving a small number of U.S. focused sales jobs that are based in Canada to the United States to be more closely aligned with its customers. According to her, the move is part of the company’s second phase of a transformation plan.
Cantech.com first reported that BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) cut the number of its employees by more than half based on information from sources. The website indicated that the consumer sales unit of the Canadian smartphone was “gone” and its enterprise sales team has been “gutted.”
Sales force fired
The Wall Street Journal quoted a statement from a spokesperson for the company who said, “I can confirm a small number of were laid off today.” Last March, BlackBerry said it has 12,000 employees.
Speculations regarding BlackBerry’s workforce reduction emerged following reports that Fairfax Financial Holding Ltd (OTCMKTS:FRFHF) (TSE:FFH), the firm managed by Prem Watsa, is negotiating with several investment firms in Canada to take BlackBerry private. Watsa is a strong supporter and one of the largest shareholders of the Canadian smartphone manufacturer. His firm owns a 10 percent stake in BlackBerry.
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is struggling to regain its profitability and share in the smartphone market with its new BlackBerry 10 operating system. Last month, the company created a special committee to explore strategic alternatives to turnaround its business, including taking the company private, joint ventures or a sale. However, analysts at BMO Capital markets opined that a strategic alternative is unlikely to help the struggling company.