BlackBerry Seeks Partners in Bid to Regain Clout

BlackBerry Ltd. (BBRY), struggling with losses and a dwindling user base, has renewed its call for partners that can help the smartphone maker get its software on more devices and potentially share the burden financially.

Chief Executive Officer Thorsten Heins, speaking to investors at the company’s shareholder meeting yesterday, said he’s looking beyond licensing the BlackBerry 10 operating system to other mobile-phone companies -- a long-stated goal that has yet to pan out. Heins is considering a range of options in his bid to turn around the company and mount a stronger challenge to Apple Inc. (AAPL)’s iPhone and Google Inc. (GOOG)’s Android platform.

“Don’t think just narrowly in terms of licensing,” he said at the meeting in BlackBerry’s hometown of Waterloo, Ontario. “It could go into cars, so think broad.”

BlackBerry, which pioneered the smartphone market only to lose ground to newer entrants, is under pressure to regain the scale it once had. Its global subscriber base slipped to 72 million last quarter, down from 76 million in the previous three months and 79 million before that. Spreading its software to other companies, including carmakers, would help foster the company’s ecosystem of hardware, applications and services.

Photographer: Pawel Dwulit/Bloomberg

BlackBerry Ltd. Chief Executive Officer Thorsten Heins said at the meeting, “Don’t think just narrowly in terms of licensing. It could go into cars, so think broad.” Close

BlackBerry Ltd. Chief Executive Officer Thorsten Heins said at the meeting, “Don’t... Read More

Close
Open
Photographer: Pawel Dwulit/Bloomberg

BlackBerry Ltd. Chief Executive Officer Thorsten Heins said at the meeting, “Don’t think just narrowly in terms of licensing. It could go into cars, so think broad.”

Heins also is looking at fresh ways to cut costs, after a job reduction that pared 5,000 positions. BlackBerry said yesterday that Richard Piasentin, head of U.S. sales, has left the company, a move reported earlier by the Wall Street Journal.

Polaris Program

The current belt-tightening program, called Polaris, is about “really trimming and slimming the organization,” Heins told reporters at the meeting. “It’s not like X thousand people have to go.”

Seeking a financial investment is another possibility, Heins said. While he didn’t give specifics, BlackBerry’s shares rose after his remarks yesterday and posted their first daily gain since a surprise quarterly loss on June 28 sent the stock plunging 28 percent. The company said at the time that it expected another loss in the current quarter amid weaker-than-estimated sales of its new Z10 touch-screen phone.

BlackBerry shares fell 3.7 percent to $9.28 at the close in New York. The stock has fallen 22 percent this year.

Ross Healy, chairman of Toronto-based financial advisory firm Strategic Analysis Corp. and a BlackBerry shareholder, said he welcomed Heins’s comments.

In Talks?

“I liked the fact he said they’re actively looking for partnerships,” Healy said in an interview after the meeting. “When someone says something like that, it’s not something you just sort of pull out of thin air. It suggests that he’s at least talking to people.”

Healy sees International Business Machines Corp., Google or Microsoft Corp. as companies that could step in and help shore up BlackBerry. IBM already works with BlackBerry to deliver corporate services.

As companies install the new BlackBerry 10 operating system, potential partners could see it as an opportunity to supplement their own products, Healy said.

“It gives you confidence that a carrier or somebody like IBM, Google or Microsoft would love to have the platform to add some punch to their overall offering,” he said.

Areas for collaboration might include enterprise services, Heins said. BlackBerry also announced plans in May to license its popular BlackBerry Messenger instant-messaging application to other platforms, including Android and the iPhone. The service is used by about 60 million BlackBerry customers, who rely on it to send more than 10 billion messages a day.

Heins didn’t give the names of any companies under consideration, and representatives for Google, IBM and Microsoft declined to comment.

“We will do our homework and assess what we think is best for the company and then we will have discussions and they will either yield partnerships, alliances or not,” said Heins, 55.

QNX System

BlackBerry already licenses its QNX software to automotive and industrial partners, which rely on it to manage things like in-car electronics. The company acquired that technology in 2010 and used it as the basis for BlackBerry 10. Still, getting those kinds of customers to embrace the new BlackBerry software for offering more sophisticated services would be a step further.

Heins, who became CEO in January 2012, began a review of BlackBerry’s strategic options last year. While he hasn’t ruled out finding an acquirer for the company, he’s said that he’s more focused on striking a licensing deal or forging some other partnership. When asked last month about the review, Heins said he wouldn’t publicly discuss any board-level conversations the company may or may not be having.

Market Share

BlackBerry’s share of the global smartphone market fell to 2.9 percent in March, bumping it to fourth place behind Microsoft’s Windows Phone platform, according to research firm IDC. Apple’s iOS and the Android operating system together accounted for 92 percent of the market.

Heins asked investors for patience at yesterday’s meeting, saying it was too early to gauge the success of BlackBerry 10, the linchpin of its comeback effort. The company only began rolling out the new phones about five months ago, and initial sales aren’t an indication of its long-term prospects, he said.

“BlackBerry is still in the early phases of our transition,” Heins said. “This isn’t just the launch of a new product but a whole new platform.”

Heins was more convincing yesterday in laying out his strategy for BlackBerry than he was on the June 28 earnings conference call, said Jef Ten Kortenaar, an individual investor who bought 3,000 BlackBerry shares last year.

“His vision for the company is an appropriate one,” he said in an interview after the meeting. “If you have the chutzpah to make it happen that could be a phenomenal thing, but do they have the chutzpah to make it happen? I don’t know.”

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.