By Jamie Barrie T hey tried but could not revive a smartphone hardware product line that once took a huge bit out of Apple. Blackberry announced it has finally thrown in the towel. The fight to maintain in house manufacturing of their smartphones is over. The Waterloo Ontario company is now totally focused on what is in the phone versus making the devices itself. Instead they’ll outsource that function to their partners; however the devices will still carry the Blackberry name. The writing has been on the wall in recent financial sum- maries and the announcement of a sharp revenue decline and yet another money losing quarter this week was the last straw. Investors got what they were looking for with the end of hardware manufacturing and the markets rewarded Blackberry with a 5 percent increase in stock price. Second quarter revenues were clearly a catalyst for change with a 31.8 percent decline over same time last year. The net loss was $372 million or 71 cents a share. Last year a modest $51 million profit was reported. CEO John Chen said ‘BlackBerry is no longer just about the smartphone, but the smart in the phone.’ A catchy headline that really marks a personal defeat for Chen who was convinced earlier this year new device launches would be successful.
announcement by promoting its first outsourcing partner- ship with one of Indonesia’s largest telecom companies. They’ll make collaborate on a joint venture to make smart- phones for that market. CEO Chen said deals with players in China and India will be soon to follow. IDC technology analyst John Jackson supports the move saying “this is an entirely sensible decision and probably an overdue one.” Jackson believes “software revenue and the margin profile associated with that is where the focus should have been, and now can be.” Ross Healy, chair of Strategic Analysis Corporation and a long time BlackBerry investor, believes in what Chen is doing. He stated “I could never figure out what they were bothering to do in the hardware business.” Like many he suggests that the company’s software patents are the golden eggs and should be where BlackBerry is focused versus the saturated smartphone business. It will take until next February, the end of the company’s fiscal year, for BlackBerry to completely exit from the hardware manufacturing business and switch to out- sourcing its devices. The company raised expectations with new forecasts that offer a potential to break even this fiscal year. This is a much improved vision that their previous expectations of a 15 percent loss.
The company attempted to soften the blow of the
51
OCTOBER 2016 • SPOTLIGHT ON BUSINESS
Made with FlippingBook - Online Brochure Maker