The Strategist

BlackBerry alters the course

09/29/2016 - 14:37

Net loss of Canadian smartphone maker and software developer BlackBerry on the results of II quarter of 2016 fiscal year (June 1 to August 31) was $ 372 million against a profit of $ 51 million for the same period in the last fiscal year.

The company's revenue for the period decreased to 31,8% from $ 490 to $ 334 million compared to II quarter 2015 fiscal year, while surveyed by Bloomberg analysts predicted figure at $ 390 million. Revenue from software sales doubled year on year and reached $ 156 million.

At the end of the current fiscal year, the company expects to receive an adjusted profit of zero to 5 cents per share, whereas they previously predicted a loss of 15 cents per share.

BlackBerry’s Chief Financial Officer James Yersh is leaving the company for personal reasons. His post will be taken by Steven Capelli, former Head of International Operations at software developer Sybase.

Smartphone sales in the reporting period in the annual comparison fell by half, reaching a total of 400 thousand items. The unit’s revenue fell by half from $ 206 million to $ 105 million.

On Wednesday, 28 September, BlackBerry has officially announced discontinuation of smart phones production. The company explained the decision by failure of their last attempt to use the Android software to stimulate consumer interest. BlackBerry brand will remain on the market, but the company will not develop them on their own, contracting the production out to partner companies instead.

"We decided to stop all development of hardware devices. We believe that this is the best way to improve profitability of the smartphone business. Outsourcing of all other hardware development will be completed by 28 February 2017, when the company ends the fiscal year. This move will help BlackBerry reduce costs and not lay off employees," - said BlackBerry’s representative.

Having suffered a fiasco in the smartphone market, BlackBerry is trying to survive by promoting the software. The vendor mainly targets at government agencies and corporate clients.

Less than three years ago, BlackBerry has signed an agreement on strategic partnership with Foxconn (Hon Hai Precision Industry), under which the companies were to jointly develop certain BlackBerry smartphones. Then, Foxconn was responsible for production and management of inventories, which significantly curtailed BlackBerry’s participation in the process of creating their own devices. Now, the company plans to cease all scientific research and development activities relating to smart phones. The new course of action is development of protected versions of the Android operating system (the company recently introduced its own Android 6.0 version for DTEK50 smartphone), as well as applications with enhanced security, available through BlackBerry Hub service.

Apart from Foxconn, BlackBerry works with other manufacturers. For example, BlackBerry DTEK50, released earlier this year, is very similar to Alcatel Idol 4, developed by Chinese TCL Corporation. Thus, BlackBerry has at least two partners, who can create mobile phones and already have experience with the Canadian company. It is interesting to note that the deal with BlackBerry enabled TCL to develop and produce smartphones under three well-known brands: Alcatel, BlackBerry and Palm.


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