News
Company to outsource smartphone development to third parties; new CFO appointed.
After years of steady decline, BlackBerry on Wednesday put its phone business out of its misery, announcing that hardware development will be outsourced to third parties from now on.
The company has already signed up its first partner, an Indonesian joint venture led by Tiphone Mobile, an affiliate of PT Telekomunikasi Indonesia. Called BB Merah Putih, it will produce, distribute and promote Android-based devices equipped with BlackBerry for Android, and that carry the BlackBerry brand, in Indonesia.
"Working with trusted partners to extend the reach and availability of our secure mobility software remains a key focus for the Mobility Solutions unit and this joint venture is just one of our next steps in making our software licensing strategy successful," said BlackBerry CEO John Chen, in a statement.
The move marks the final step in the company’s transformation from a traditional smartphone maker to a software company focused on mobile security, privacy, device management, and enterprise mobility.
"BlackBerry has succumbed to the pressure so many other phone makers have faced. It lacks the scale to be competitive in devices and can’t keep producing its own phones indefinitely just to serve a small subset of its clients addicted to its home-grown devices," said Ben Wood, chief of research at CCS Insight, in a research note. "Having a third party take over manufacturing is sensible; however, how long that lasts has to be a question mark."
The announcement was made the same day that BlackBerry announced its fiscal second quarter financial results.
For the three months to 31 August, revenue came in at US$334 million (€297.9 million), down from $490 million a year ago. The company swung to an operating loss of $371 million from a year earlier operating profit of $33 million. BlackBerry turned in a net loss of $372 million, compared to a net profit of $51 million in the year ago quarter.
"We are reaching an inflection point with our strategy. Our financial foundation is strong, and our pivot to software is taking hold," Chen said, in BlackBerry’s financial statement.
Also on Wednesday, BlackBerry revealed that CFO James Yersh is leaving the company, citing personal reasons.
"I want to thank James for his great contributions to BlackBerry," said Chen, in another separate statement. "Under James’ leadership we have achieved excellent financial discipline, a key accomplishment as part of our overall turnaround and transformation strategy for BlackBerry."
Replacing Yersh is Steven Capelli, who most recently served as president of worldwide field operations at SAP-owned enterprise software maker Sybase. Before that, he was CFO of Siemens Pyramid.
"Steve is a highly experienced and respected financial expert and a strong business partner. He served in various roles at both Pyramid and Sybase for several years and reported directly to me during my service as the CEO of those companies," Chen said.
Capelli’s appointment becomes effective on 1 October. Yersh will stay with BlackBerry until 31 October to ensure a smooth transition.
