It’s Official. The Canadian company, BlackBerry Ltd. reported fiscal second –quarter sales that missed analyst estimates and said it will stop making its iconic Smartphones and focus on Software.
Once upon a time, the QWERTY keyboard-set phones were the choice of businessmen, managerial and even President Barack Obama. A long ago BlackBerry compromise beat in a battle lost to Apple Inc. and Samsung Electronics Company., but now BlackBerry is turning over production of the phones to overseas partners and turning its full attention to the more profitable and growing software business.
It’s the Official of a move in the making since Chief Executive Officer John Chen took over almost three years ago and outsourced some manufacturing to Foxconn Technology Group. Getting off the Smartphone business losing money BlackBerry’s books will also make it easier for the company to continuously hit profitability. BlackBerry‘s device business, which it calls “Mobility Solutions,” will focus on developing applications and an extra-secure version of Google’s Android operating system that it can license to other companies.
An analyst at BGC partners, Colin Gillis said, “This is the completion of their exit, Chen is a software CEO historically. He’s getting back to what he knows best: higher margins and recurring revenue.”
Also Gillis said, “Chen should be able to implement his software strategy as long as he keeps costs in line and maintains cash on the balance sheet”
BlackBerry recorded losses of $A425m in the last quarter, but made a profit of $51m at the same time last year.
President Obama was one of the world’s most committed BlackBerry fans and was the first leader of the free world to use the gadget, but even Barack Obama was forced to quit his favorite BlackBerry and swap to a more secure phone earlier this year.
In a statement Chen said, “Our new Mobility Solution strategy signs of energy, including our first major device software licensing agreement with a telecom joint venture in Indonesia.” Under this policy, we are focusing on software development, including security and application.
Well now, BlackBerry plans to end all internal hardware development and will outsource that function to partners. This allows BlackBerry company to reduce capital requirements and enhance return on invested capital.