Still plenty of work ahead for BlackBerry: Chen
WATERLOO, Ont. - BlackBerry chief executive John Chen is meeting with some of the smartphone company's biggest customers, from government agencies to the world's largest banks, in hopes of mending relationships neglected when it rolled out refreshed devices last year.
"We should have talked to the customers more when we launched new technology," Chen said Friday after the release of BlackBerry's latest quarterly financial results.
"It is my opinion that we didn't do enough of it."
Chen treads carefully when talking about BlackBerry's past after being hired last November to turn the faltering company around. But he says lessons have been learned and the company is already trying to correct some of its missteps.
On Friday, the fourth-quarter results showed some of that progress.
BlackBerry's posted a loss of US$423 million or 80 cents per share for the three months ended March 1, a vast improvement from the multibillion-dollar loss it booked in the third-quarter, but still below the $98 million profit, or 19 cents per diluted share, posted a year earlier.
Excluding several one-time items, BlackBerry reported an adjusted loss from continuing operations of $42 million or eight cents per share. The average analyst estimate compiled by Thomson Reuters had been for a deeper loss of 55 cents per share.
However, revenue fell below analyst predictions, coming in at $976 million compared with $2.68 billion a year ago. Analysts had expected about $1.1 billion.
Investors gave a chilled reaction to the results, sending BlackBerry's stock down 6.5 per cent, or 65 cents, to $9.31 on the Toronto Stock Exchange. Volume was more than 7.1 million shares, move than double the issue's daily average.
Chen indicated there was still plenty of work ahead in turning the company around.
"There's so many things that need to be fixed," he told reporters at the company's headquarters in Waterloo, Ont.
As part of its effort to lower costs and get some value from assets, the company has decided to sell a majority of its Canadian real estate holdings to various buyers.
Some went to the University of Waterloo under an agreement that would also allow the company to lease back select properties, while others were sold to a buyer yet to be identified.
The property sales raised questions about whether BlackBerry's long-term future in Waterloo was in doubt, but Chen said he intends to keep the company's headquarters in the city and maintain its QNX division in Ottawa.
"I don't have any plans to move out of Canada," he said.
Over the next year and a half, BlackBerry will unveil more keyboard smartphones designed primarily for its corporate customers.
Chen hopes the company will be able to market to them through new sales teams that cater to major sectors like government, financial services and health-care clients.
He also hopes to hire more research and development engineers.
"It's very important, so we need to start focusing on that while we finish off the tail end of our cost-reduction plans," he said.
BlackBerry is still trying to dislodge itself from its iconic past, a factor that is glaringly obvious when you consider which devices remain bestsellers with customers.
On Friday, Chen announced that a new production run will be ordered for its older Bold devices because corporate clients are asking for it. The Bold, which is BlackBerry's biggest selling phone, will serve as a midpoint before it launches a "classic" model inspired by the older hardware, which had a trackpad and buttons for menu functions.
Despite the perception that BlackBerry has leaned too much on its older devices, at this point they're still the most popular piece of hardware the company is selling, and that's a fundamental problem, said National Bank analyst Kris Thompson.
In a note to investors, Thompson highlighted that the majority of devices sold were still on the old BlackBerry 7 operating system and that shipments of BlackBerry 10 devices were still on the decline as the hyped launch from last year fades from memory.
Over the coming quarters Chen hopes that new BlackBerry enterprise management software, dubbed BES12 and rolling out in November, will help transition more business customers to its new operating system.
Other changes are in the works as Chen continues to reorganize the company with a goal of reducing costs. That plan includes the elimination of about 40 per cent of the company's workforce before the end of May.
When he took the leadership role last November, Chen had to immediately get a tighter control on expenses, he said, because surveying the problems at the troubled company sequentially would have taken too long.
"You cannot ever cut yourself to glory," he said.
"That transition was one of the most difficult things in the beginning."
In its outlook, BlackBerry says it aims to break even by the end of its 2015 financial year, which wraps up next March.