BlackBerry CEO John Chen Is Creating the Unimaginable: Optimism

By Michelle Maisto  |  Posted 2014-01-09 Print this article Print

BlackBerry announced Dec. 20, with its latest earnings report, that it has signed a five-year deal with device-manufacturer Foxconn. The company, which has multiple campuses in China, will handle inventory for BlackBerry—relieving it of the risks of dealing with a surplus—as well as the logistics of its supply chain.

Speaking with Bloomberg Television, Chen colored in the deal further.

"Foxconn could be a really great partner, not only to eliminate my inventory risk, [but] also somewhat their ability to penetrate various different markets … the emerging and developing markets. They have a better pulse on that," said Chen.

Chen also spoke, with the pragmatism he's become known for, about the future possibility of moving away from the hardware aspect of the business. "For now we definitely need hardware," he told Bloomberg Television. "But the world may shift. I've been in business long enough to know that you never say never."

Speaking about his vision for BBM, Chen told Bloomberg Television: "I like it from an enterprise point of view; I think every enterprise would love to have their own secure messaging Intranet."

Chen also discussed with Bloomberg Television his newest hire, Ron Louks, now president of Devices and Emerging Solutions, who brings something emotional to BlackBerry that Chen doesn't. "What impressed me about Ron is … he's in touch with not only the technology and design to make a phone great, but how people like the phone … That level of skill I need to have … I'm a very factual engineer … but he knows what a cool phone is. I'd love for him to help us there."

AT&T, at CES, pledged its support for BlackBerry and, according to Chen, so have many other major carriers.

But of course, not everyone is feeling sunny about the new BlackBerry.

Jefferies, which has a hold rating on the stock, noted that Chen doesn't expect to turn a profit until fiscal year 2016. (BlackBerry's fiscal year is nearly a year ahead of the calendar.)

"2016? That sounds terrible!" Bret Kenwell wrote on investment site The Street Jan. 6. "Average analyst estimates expect BlackBerry stock to lose $1.82 in fiscal 2014 and $1.37 in fiscal 2015, so I'm not exactly convinced that the company will be out of the red by 2016."

Ken Hyers, a senior analyst with research firm Strategy Analytics, offered a calmer response.

"I think that John Chen has done a remarkable job over the past six or eight weeks of restoring investor confidence in the company. His quick moves to restructure the company around its four core divisions has clarified roles and responsibilities internally, and the Foxconn deal will reduce expenses. … He's also made it clear that there is a pipeline of devices coming, targeting specific customer bases," Hyers told eWEEK.

All this has made Hyers "cautiously optimistic" that BlackBerry is back on course.

"This doesn't mean that BlackBerry is out of the woods yet," Hyers clarified. "Chen has been realistic enough to say that it's going to take until 2016 to return to profitability; some observers might question whether even that's possible. But at least one investor, Fairfax, had enough confidence in the company's new direction to invest an additional $250 million this week."

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