BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) CEO John Chen told a group of reporters at the Consumer Electronics Show that he intends the embattled tech company to have a positive cash flow in the next year and to be profitable by 2016, reports Maurice Cacho for CTV News. He also continued to de-emphasize the smartphone division, the weakest part of the company, in favor of enterprise.
“For the next 18 months development will only focus on enterprise,” said Chen.
Chen told reporters that the enterprise business has better margins than handsets and that the big data and device-to-device sub-sectors have much greater growth potential. “That’s the frontier to win,” he commented.
Enterprise and security have always been BlackBerry’s strengths
Enterprise products and security have always been BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s main asset, and the company’s downfall is largely the story of smartphone purchasing decisions moving from corporate IT departments to individual employees, who left BlackBerrys for iPhones in droves as soon as management teams gave the go ahead. Returning to its strengths for the company’s turnaround effort makes good sense.
While most analysts expected BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) to fold before the end of 2013, and saw Prem Watsa’s bullishness as wild optimism, Chen has added a degree of realism to management’s announcements since he took the helm in November. He also seems to be fully aware of the challenge he faces. A series of management changes, which might be disconcerting at another company, and the release of BBM for competing platforms, show that he isn’t afraid of making major changes for the company’s long-term benefit. “It’s going to take a while,” said Chen in reference to BlackBerry’s turnaround effort..
Expect one more BB10-powered smartphone
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) still has a following in some emerging markets, most notably Indonesia, and it now has a deal in place with Foxconn Technology Co., Ltd. (TPE:2354) (OTCMKTS:FXCOF) to produce budget smartphones that will cost less than $200. This means the company still has at least one more BB10-powered smartphone in the works. Even if Chen has privately ceded the high-end smartphone market to Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) and Apple Inc. (NASDAQ:AAPL), the new model may simply be far enough along in development that he expects to lose less money by launching an unsuccessful new product line than dropping it cold. Besides, there’s always an outside chance of a comeback product if Chen can regain consumers’ confidence.