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Thursday, 10 April 2014 11:32

BlackBerry could dump handset business

Written by Nick Farrell



CEO is not impressed

BlackBerry could dump its handset business if it remains unprofitable, according to its chief executive officer. John Chen said that if he cannot make money on handsets, he will move the company out of the handset business. Chen said the time frame for such a decision was short, but said it should be possible to make money off shipments of as few as 10 million a year.

In the good old days, BlackBerry shipped 52.3 million devices in fiscal 2011. Last quarter it recorded revenue on less than 2 million last quarter. Chen took control in November and said BlackBerry was also looking to invest in or team up with other companies in regulated industries such as healthcare, and financial and legal services, all of which require highly secure communications. He thought that some small acquisitions to strengthen BlackBerry's network security offerings were also possible. The company was building its engineering team on the service side that is focused on security. Security was more important to businesses and government since the revelations about US surveillance made by former National Security Agency contractor Edward Snowden.

Chen acknowledged past management mistakes at Blackberry and he said that he had a long-term strategy to compliment the short-term goals of staying afloat and stemming customer defections. In March, the embattled smartphone maker reported a quarterly net loss of $423 million and a 64 percent drop in its revenues, underscoring the magnitude of the challenge Chen faces in turning around the company. Chen is legendary for turning around failing companies. Chen was credited with turning around Sybase in the late 1990s.

His plan is to have BlackBerry zero in on its core base of corporate and government clients, and on its services arm, which secures mobile devices on the internal networks of big clients. BlackBerry has laid off about 9,500 employees, or more than half its work force over the last three years, as it has rushed to cut costs in the face of mounting losses.

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