Winnipeg Free Press - PRINT EDITION

BlackBerry taps partners

Sees boosted ties as key to future turnaround

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WATERLOO, Ont. -- BlackBerry plans to forge stronger partnerships with others in the tech industry and build better relationships with longtime business customers as the smartphone company attempts to turn around flagging operations, chief executive John Chen says.

As a first step, the company announced on Friday a five-year agreement with Foxconn that will see the Chinese manufacturer begin producing a smartphone for Indonesia early next year.

The handset manufacturer, best known as one of Apple's main suppliers, will also help develop new models and manage the inventory with operations based in Mexico and Indonesia.

Chen, who was just recently brought in to head the company, has a formidable challenge on his hands after BlackBerry posted a whopping third-quarter loss of US$4.4-billion, which was worse than analysts expected.

But he set aside those dismal numbers on Friday to focus on what will be different.

"There is a way to make this company great," Chen said during a media roundtable at the company's headquarters in Waterloo, Ont.

The plan, he said, involves focusing on BlackBerry's software business, its enterprise services and instant messaging software.

While he's had less than two months on the job, the new CEO, who quietly shed the "interim" part of his title, has many ideas that include a return to some traditional BlackBerry designs.

For instance, a keyboard model will be the first smartphone to emerge under the Foxconn agreement after the failed attempt at the touchscreen BlackBerry Z10 earlier this year.

While Chen said he couldn't make any official announcements, he hinted the keyboard phone is a priority.

"I will tell you that I always tend to listen to my customers... My customer wants the keyboard," he said.

The plan counters some analyst suggestions that BlackBerry ditch its handset business entirely to focus on parts of its business that are more profitable.

Chen has outright dismissed those suggestions.

"Whatever it takes, we're going to make money in handsets (although) it may be a small amount of money," he said.

The road to handset profits will be a difficult one -- BlackBerry's third-quarter results showed BlackBerry 10 smartphones, once touted as the way to recover lost ground, have hardly been selling at all. More than 74 per cent of the 4.3 million BlackBerry devices that landed in user's hands in the quarter were its older BlackBerry 7 models, the financial report showed.

Those poor handset sales weighed on BlackBerry's revenue, which was US$1.2 billion, down 56 per cent from a year ago when it didn't have the new smartphone models on the market. It also was $400 million lower than analyst estimates compiled by Thomson Reuters.

Adjusted losses from continuing operations, which filter out various expenses such as restructuring costs, were US$354 million, or 67 cents per share -- 23 cents below analyst estimates.

The goal is to make BlackBerry's handset business cash-flow-positive through the Foxconn agreement, with hopes of returning to a profit in fiscal 2016, Chen said.

 

-- The Canadian Press

Republished from the Winnipeg Free Press print edition December 21, 2013 B7

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