BlackBerry Enlists Foxconn to Make Phones

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Dec. 20 (Bloomberg) -- BlackBerry struck a five-year deal with Foxconn to manufacture its devices, following another quarterly plunge in sales and mounting losses. Julie Hyman reports on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Far worse than analysts anticipated.

Shares are actually rising this morning thanks to a separate announcement about a new partnership with foxconn.

We have julie hyman and cory johnson to break this down.

Walk us through the foxconn partnership.

It is a five-year partnership, foxconn will take over some manufacturing and help market the phones in indonesia and asia.

They were unclear about the financials in the conference call, how are they going to pay foxconn.

There is some talk that maybe this would open more of a mass-market audience to blackberry products.

It is not entirely clear.

They still have a strategy.

That has been their big struggle.

They change their business model a few years back to go into consumer products and try to grow that.

Now they are pulling back from that.

Focused on enterprise -- they talk a lot about enterprise on a call and in the statement.

You would think that is their only hope.

John chen, the new ceo, gave himself and out.

He said i have only been here 45 days, cut me some slack as i dive in to this giant hole.

He did not use those words -- the numbers, he would not use the phrase a zombie.

It is like is on the movie.

I know it is coming, woah.

Them this time next year, the four of us are sitting here, what will we say about blackberry?

There is no sign of a turnaround.

The products do not seem to be taking off.

They have legacy costs that keep tripping up on them.

They continue to lose contracts.

Cio is going to say we need to get our new blackberries -- who is going to say that?

We need to get our smartphones from the company that is targeting indonesia.

That might not sound like a crazy idea, indonesia has 250 million people.

If you are going after indonesia, you are going down market.

I got a new blackberries this week.

Downmarket.

Did you buy that or is it provided to you?

I am not going to tell you that.

There is one thing to be said, it is still a blackberry 7 on the old software.

Most of the sales were blackberry 7's. the point about what are the corporations going to be ordering, there was a write-down of $4.6 billion.

In part it was licensing agreements, and part it was carriers who bought blackberries and say we do not want these.

Inventory write-downs, as well.

Stuff they have been making and are not going to be able to sell.

The single largest part of it was patents, licensing, and acquire technology.

They said it was not so much patents, it was more licensing than patents.

That was not clear in the release.

On the call -- that never came to the desks, book value takes a whack.

Book value is less than half of what it was before.

It is amazing.

Why i technology companies getting revaluations?

You see how fast things can change.

Nokia can be the dominant cell phone maker in 2005 -- you know the answer.

All you need is the word innovation associated with what you are doing, the market loves it.

Technology, innervation, the future of business.

Is the whole reason that apple says we want to hold onto our cash -- this is their fight with icahn and others who want to buy back shares?

They want flexibility.

You look at blackberry, nobody wants to be blackberry.

To your point, i think people, including the markets, get excited about the notion of the future and it gets a higher pe multiple than software as a service -- it gets a higher pe multiple.

Software as a service is better than software.

Branding image aspiration.

Financial services -- their branding is terrible.

Innovation technology, people are excited.

At the very least, this lesson with blackberry teaches us something.

I am downmarket.

In the world of technology, the notion of a sum of the parts analysis is bunk.

So much of it relies on the value of intellectual property.

At the very least, the analysts

This text has been automatically generated. It may not be 100% accurate.

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