BlackBerry Wants to Eventually Return to Consumer MarketGerrit De Vynck
BlackBerry Ltd. Chief Executive Officer John Chen said he wants to return to the consumer market someday, though it’s too soon right now.
The smartphone maker is focusing on business users, Chen told reporters yesterday at BlackBerry headquarters in Waterloo, Ontario. Already, the new Passport device for professionals has surpassed his expectations, selling 200,000 units since it was unveiled two days ago, according to Chen.
“Over time I definitely would like to reach the everyday people, but it’s too early for us now,” Chen said. “One thing at a time -- let’s get ourselves making money and generating cash and get a good book of business.”
The CEO, who took the helm in November, has been leading a turnaround attempt by distinguishing BlackBerry’s products as more serious tools for corporate users than devices like Apple Inc.’s iPhone, which are coveted for their apps and video capabilities. Before his tenure, BlackBerry had made an ill-fated attempt to re-establish itself in the consumer market with the touch-screen Z10 phone, which flopped and led to a writedown of almost $1 billion.
While he waits to reenter the consumer market, Chen said he’s already at work on a new concept for devices set to debut next year, including one at Mobile World Congress in March.
Another version of the Passport is also in the works, he said. The square-screened Passport is designed for business users who write e-mails, study spreadsheets and read documents on their phones.
After the Passport was introduced at events in Toronto, London and Dubai this week, it sold out in 6 hours on BlackBerry’s website and within 10 hours on Amazon.com, Chen said. A year ago, the company took an inventory writedown of almost $1 billion, mostly for Z10 devices that had been designated as its flagship model to compete with the iPhone.
“Undersupply is a better problem than oversupply,” he said. “I will be squeezed a little bit on products.”
The shares rose 4.7 percent to $10.26 yesterday, giving BlackBerry a market value of $5.4 billion. The stock had fallen 6.8 percent the day before.
“Investors are probably happy with the report that the new BlackBerry Passport has done well out of the gate,” said John Butler, an analyst with Bloomberg Intelligence. “Chen has done a good job of managing expectations. I think they have a shot at stabilizing the device business, which has been suffering at the hands of Apple and Samsung.”
BlackBerry yesterday reported an adjusted net loss of 2 cents a share, narrower than the loss a year ago and better than the 16-cent deficit projected by analysts on average. Chen said the company is still on track to reach break-even cash flow by the end of this fiscal year and to return to profit next fiscal year.
Chen faces steep competition when he is ready to get back into the consumer market. BlackBerry’s share of the global smartphone market is down to 0.5 percent, according to research firm IDC. And the 2.4 million smartphones it sold last quarter pale in comparison to the 10 million iPhone 6 and iPhone 6 Plus devices that Apple sold just last weekend.
To stabilize BlackBerry’s balance sheet and focus on returning to profitability next fiscal year, Chen has worked to expand revenue from business services. He plans to double software revenue next year, driven by new features like BlackBerry Blend, which helps consumers merge their work and personal information -- like calendars and e-mail -- on their devices.
“The channels are efficient on the enterprise side,” Chen said. “So we don’t take our eye off the ball, so to speak -- then we’ll expand.”
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