BlackBerry in freefall after $4.6 billion loss on charges, announces deal with Foxconn to make budget handsets
The situation at BlackBerry hasn’t gotten any better since new CEO John Chen took over, but now it looks like the Canadian manufacturer is heading in a new direction by striking a deal with Foxconn to manufacture its budget handsets for fast-growth markets.
BlackBerry’s woes are well documented. After the $1 billion write-off it had to undertake last quarter, the organization was left with $2.6 billion in terms of cash reserves. It then had to undertake a further $1 billion loan to fund its restructuring efforts. Interim CEO John Chen seems to have put the money to good use, as he shuffled BlackBerry’s divisions into Enterprise Services, Messaging, QNX Embedded Business and Devices.
However, the reorganization did little to boost BlackBerry device sales. Devices like the BlackBerry Z30 and Q10 did not find any traction with consumers, and revenue for the quarter was at a meagre $1.2 billion, which is less than the $1.59 billion analyst estimates, and a far sight less than the $2.7 billion BlackBerry netted during the same quarter last year. Overall loss for the third quarter was $4.4 billion, or $8.37 a share.
Aside from weak sales in the consumer market, BlackBerry is also seeing the mass exodus of its high-level management, with three executives leaving the organization earlier this week.
In a bid to turn things around, Blackberry announced that it would be entering into a five-year strategic partnership with Foxconn over device manufacturing. The devices will be manufactured at Foxconn’s facilities in Indonesia and Mexico. BlackBerry is looking to target fast-growth markets like Indonesia, and is looking to launch a host of budget handsets in these markets.
John Chen mentioned that the deal with Foxconn allows BlackBerry to focus on designing iconic devices and software, and that Foxconn’s scale and efficiency will let BlackBerry compete more effectively.
However, there isn’t a lot of time left for BlackBerry to figure out the direction it wants to head in. The next quarter or two will decide the fate of the once-mighty Canadian organization.