Blackberry bought private jet months before layoffs

Troubled smartphone group Blackberry has confirmed that it took delivery of a private jet in July, just months before it announced thousands of job cuts and said it expected to make an operating loss of almost $1 billion in the second quarter.

The company said it had ordered a used Bombardier Global Express jet this year to replace its two older Dassault planes, which it purchased several years ago.

This type of plane, which carries between 15-19 passengers, typically costs more than $20 million, according to the Financial Times.

The purchase comes despite the Canadian company - which once dominated the smartphone market - battles to keep up with rivals such as Apple and Samsung, which have steadily eaten away at its market share.

"The company considered several options and selected a used Bombardier aircraft, which was eventually delivered in July," the company said in a statement.

"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."

On Friday, the struggling company announced second-quarter preliminary earnings and revenue that came in below analyst expectations.

Daniel Gleeson, mobile analyst at IHS Electronic & Media, said the decision to buy the jet showed just how wrong the company had got its own forecasts.

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Blackberry bought private jet months before layoffs
CNBC6 hours ago
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Lisamarie Babik
Troubled smartphone group Blackberry has confirmed that it took delivery of a private jet in July, just months before it announced thousands of job cuts and said it expected to make an operating loss of almost $1 billion in the second quarter.

The company said it had ordered a used Bombardier Global Express jet this year to replace its two older Dassault planes, which it purchased several years ago.

This type of plane, which carries between 15-19 passengers, typically costs more than $20 million, according to the Financial Times.

(Read more: BlackBerry to slash 4,500 jobs in restructuring )

The purchase comes despite the Canadian company - which once dominated the smartphone market - battles to keep up with rivals such as Apple and Samsung, which have steadily eaten away at its market share.

"The company considered several options and selected a used Bombardier aircraft, which was eventually delivered in July," the company said in a statement.

"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."

On Friday, the struggling company announced second-quarter preliminary earnings and revenue that came in below analyst expectations.

(Read more: Record iPhone debut isn't a 'victory lap' yet: Pro )

Daniel Gleeson, mobile analyst at IHS Electronic & Media, said the decision to buy the jet showed just how wrong the company had got its own forecasts.

"Judging from both the corporate jet purchase and the write-down of smartphone inventory, Blackberry was very overconfident," he told CNBC on Monday. "The purchase of the jet is particularly worrying as the company should have seen this coming at the start of its most recent quarter."

Also in its preliminary results, Blackberry said it expected to report an operating loss of between $950 million-$995 million for the period, given the "increasingly competitive business environment." The company's full results for the second quarter will be published on Friday.

Blackberry also revealed plans to slash 4,500 jobs - more than 40 percent of its workforce - as part of a massive restructuring operation which it hopes will reduce its operating expenditures by half by the end of the first quarter of the next fiscal year.

Nomura's global communications equipment analysts Stuart Jeffrey and Woo Jin Ho were unimpressed with Blackberry's preliminary results.

"This might just be the worst miss that we have seen in 17 years of covering tech stocks," they wrote in a research note on Monday.

There has been speculation about a possible sale of the company. Earlier this month, Dow Jones reported the struggling handset maker was looking to auction itself off.

Jeffrey and Jin Ho, however, added: "The pace of decline in Q2 (second quarter) must, we presume, make a successful sale even harder than before."

Following a temporary halt in the trading of Blackberry shares on Friday, the stock plunged by 23 percent to $8.06, before recovering slightly. Blackberry shares closed down 17.1 percent at $8.83 on Friday.