BlackBerry Handset Supplier to 'Wind Down Relationship': Report

 
 
By Michelle Maisto  |  Posted 2013-09-26
 
 
 

These are dark days for BlackBerry, once the global smartphone leader. 

Two days after BlackBerry signed a $4.7 billion letter of intent to sell the company to Fairfax Financial Holdings, the investment firm run by former BlackBerry board member Prem Watsa, BlackBerry's smartphone supplier, Jabil Circuit, announced it is bringing its partnership agreement with BlackBerry to a close.

"We are in discussions right now, on how we are going to wind down the relationship," CEO Mark Mondello said during a conference call late on Sept. 25, the Globe and Mail reported the next day, adding that the comment was a rare departure from the company's usual practice of declining to comment on specific customers.

"The comments add to growing anticipation that BlackBerry could stop making physical devices after its latest devices failed to catch fire with consumers," the report added.

BlackBerry, which was scheduled to hold its second quarter earnings call the morning of Sept. 27, called off the call Sept. 25.

"In light of the letter-of-intent agreement between BlackBerry and Fairfax Holdings Limited that was signed and announced on Monday, Sept. 23, BlackBerry has cancelled its second quarter earnings conference call and webcast that had previously been scheduled for Friday," the company said in a statement.

It added that at 7 a.m. it will still publish its results, but that management's discussion and analysis will have to wait for next week.

On Sept. 20, as Apple made its newest iPhone available, BlackBerry released the preliminary results of its second quarter, sharing that it expected a net operating loss between $950 million and $995 million. Revenue was expected to be $1.6 million, and the company sold 3.7 million smartphones during the quarter.

More surprisingly, CEO Thorsten Heins announced a refocusing effort on the enterprise and prosumer markets and said that the company's smartphone portfolio will be reduced from six devices to four, with two high-end devices and two entry-level.

"Going forward, we plan to refocus our offering on our end-to-end solution of hardware, software and services for enterprises and the productive, professional end user," Heins said in the statement. "This puts us squarely on target with the customers that helped build BlackBerry into the leading brand today for enterprise security, manageability and reliability."

The move also undoes BlackBerry's work of the last 10 months. Through efforts like hiring singer-songwriter Alicia Keys to be its creative director, pursuing projects with creative types like director Robert Rodriguez and working to stock its app store with games and consumer-friendly apps, BlackBerry has worked to create devices and a BlackBerry 10 ecosystem that could compete with Apple and Android devices for consumer affections.

Following the news that BlackBerry will stop marketing to consumers, T-Mobile decided to stop stocking BlackBerry handsets in its stores.

David Carey, executive vice president for corporate services, told Reuters Sept. 24 that T-Mobile will continue to sell, display and support the devices, but it would no longer keep them in stock, calling it "inefficient," given the low demand it sees for the smartphones.

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