Not long after news that BlackBerry may lay off 5,000 workers surfaced, it’s now believed the struggling company is on the verge of a $1 billion writedown of unsold smartphone inventory.
In June BlackBerry reported a 47% gain in the value of its inventory last quarter. This brought its inventory value to $900 million. According to data compiled by Bloomberg, it was the largest increase among 75 of its peers. And that figure is due to rise again, analysts believe.
If BlackBerry does write off unsold inventory, it would mark the fourth time in two years.
The Waterloo-based company is due to report its fiscal second-quarter results on September 27. At that time, BlackBerry may finally confirm or deny the accuracy of reports that the smartphone pioneer could lay off up to 40% of its staff—or roughly 5,000 employees—by the end of this year.
According to the Wall Street Journal, these alleged cuts would impact all departments.
BlackBerry is also in the process of lobbying the Canadian government to allow for a foreign buyer to acquire parts or all of the company. Currently, the Investment Canada Act states that the government automatically reviews any foreign takeover bid of more than $332 million. BlackBerry’s marketshare is currently around $5 billion.
BlackBerry, which has struggled in recent years amid competition from Apple, Google, and others, is unlikely to be sold in a domestic buyout. The only serious bidder at the moment is Prem Watsa and his firm Fairfax Financial Holdings; as the largest shareholder in BlackBerry, he’s been trying to pull together pension funds to acquire the Waterloo company. But insiders suggest his plan is crumbling due to a lack of interest.
It’s unknown whether there are any serious foreign bidders circling BlackBerry, but it would at least open up the company’s options. Right now, a foreign takeover would most likely be rejected by the Canadian government, which could be why interest has so far been minimal.