BlackBerry has cut roughly 200 jobs during the quarter that ends February 29 (fiscal Q4 2024), with plans for more layoffs as part of splitting its business into independent Internet of Things (IoT) and cybersecurity units.
Most of the layoffs are in its cost of goods and in its research and development departments. Additional job cuts planned in its cybersecurity business to save it some $27 million annually and another $8 million in cost reductions coming from non-headcount cuts.
BlackBerry officials said that the vendor is targeting $100 million of annualized net profit improvements through a combination of cost reductions and margin expansion. The company said it had realized some $50 million of annualized cost saving actions disclosed in the prior quarter.
Blackberry Cost Reduction Details
Without offering any details, BlackBerry said it has identified and implemented actions to achieve approximately $55 million of the $100 million annualized target in the current quarter.
Within general and administrative functions, BlackBerry expects annual run rate savings of approximately $20 million. Accordingly, the company has shuttered six of its 36 global office locations, which saves it some $7 million on an annualized basis.
Other unidentified reductions are projected to save about $13 million. Costs associated with these actions in the current quarter are expected to total approximately $12 million.
In December 2023, BlackBerry discarded its planned initial public offering (IPO) for its IoT business, but said it still intended to split the IoT and cybersecurity businesses into fully standalone divisions under the corporate umbrella.
Blackberry CEO Giamatteo Comments
BlackBerry CEO John Giamatteo said in December the move would result in significant cost cutting and “rightsizing.” By mid-2024, Blackberry expects to complete the separation of the two businesses, “getting into a position where we can have the majority of the functions and capabilities within the two business units up and running and stand-alone. I think that would be a success for us,” he said.
At this point, BlackBerry has made “material progress” towards establishing both the IoT and cybersecurity business units as fully standalone divisions. The company has established a project management office and appointed leading management consultants, Alvarez & Marsal, to assist with the process.
Divisional chief financial officers, chief people officers and general counsel for both the IoT and cybersecurity businesses have been appointed and are in the process of establishing divisional back-office teams that will complement the already-standalone sales, marketing and R&D functions for each business.
Blackberry Financial Guidance
BlackBerry expects total revenue for fiscal Q4 of $150 million to $159 million, and projects its cybersecurity annual run rate (ARR) to stabilize sequentially in the quarter. The company has guided to $62 million to $66 million in IoT revenue and cybersecurity revenue of $83 million to $88 million for the period.
“The steps taken have required difficult decisions, and I appreciate the thoughtful, rigorous approach that has been adopted," said Giamatteo on a February 2024 investor’s conference call. "The company is fully focused and working with urgency towards our goals. We're directing our resources where we believe we can maximize returns and continue to delight our customers.”
