At their peak just a few years ago, BlackBerry smartphones were symbols of corporate and political power. When President Barack Obama took office, he made keeping his BlackBerry a personal priority, and when the telecoms service had a hiccup, so did business on Wall Street.
But after being upstaged time and again by industry rivals, the devices may soon remain only in memories. On Friday, BlackBerry announced it would lay off 4500 employees - nearly 40 per cent of its already reduced workforce. The cut is so deep that some analysts and investors said the company's days as a smartphone maker were effectively over.
The company also said it expected to report a quarterly loss of nearly $US1 billion ($1.06 billion) next week, mainly the result of a writeoff of unsold BlackBerry phones, but also because of payments to stop manufacturers and suppliers from adding to the pile. And of the six phones the company offers, two will be discontinued.
"This is a recognition that they lost the handset war," said James Gellert, the chairman and chief executive of Rapid Ratings International, an investment risk evaluation firm. "It's certainly a waving of the big white towel."
Potential suitors were thought to be running the rule over BlackBerry on the weekend. Its patents, software and cash reserves could make it worth about $US5 billion.
Mike Lazaridis, the co-founder of BlackBerry who stepped down as chief executive in 2011, has spoken to private-equity firms about a possible bid for the troubled company. He has approached Blackstone Group and Carlyle Group about making an offer.
BlackBerry's biggest shareholder Fairfax Financial Holdings is thought to have spoken to industry and private-equity players. Other potential buyers could include Canadian pension funds, as well as sector rivals such as Samsung and Chinese technology business Lenovo.
BlackBerry halted the trading of its shares on Friday to make the bleak announcement. It said revenue was expected to have been $US1.6 billion in the second quarter, almost half of the $US3 billion analysts had anticipated. Sales of phones during that time totalled 3.7 million. Apple, by comparison, sold 31.2 million iPhones.
More alarming to many analysts was BlackBerry's announcement it had used about $US500 million in cash to stay operating during the past quarter, lowering its cash holdings to $US2.6 billion. Although the company has been losing market share for several years, it had managed to increase its cash holdings.
Shares in the company tumbled 17 per cent for the day to $US8.73, a far cry from the $US138 levels reached in 2008.
Four years ago, BlackBerry had 51 per cent of the North American smartphone market, according to research firm Gartner. But the fast-changing industry, and in particular phones from Apple and Samsung, left the company behind.
New York Times, agencies