How BlackBerry Ltd (BBRY) Plans To Become Profitable By FY2016

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How BlackBerry Ltd (BBRY) Plans To Become Profitable By FY2016
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BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) CEO John Chen reiterated that he aims to make the company profitable by FY2016, which ends February 2016. Chen says BlackBerry will reach cash flow break-even by the end of the current fiscal year. Goldman Sachs analyst Simona Jankowski held a meeting with John Chen to discuss how he plans to make the company profitable. Goldman Sachs has a Neutral rating on the stock with an $8.80 price target.

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BlackBerry to reduce cash burn over the next few quarters

To break even, Chen said BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) will have to bring down quarterly opex to $500 million, compared to $577 million in the February quarter. The Waterloo-based company will have to increase its gross margins from 36% in FY2014 to 40%, and achieve annual smartphone sales of at least 10 million units compared to just 1.3 million units in the latest quarter.

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BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) ended FY2014 with $2.7 billion in cash, after burning $700 million in the fourth quarter. John Chen expects to bring down the cash burn over the next few quarters. BlackBerry has already made significant efforts to cut its manufacturing obligations, including tie-ups with Foxconn Technology Co., Ltd. (TPE:2354) and Wistron. The company is also likely to benefit from the real estate and tax tailwinds in the current quarter. The Canadian company is selling its real estate assets. The company expects tax refunds of about $400 million in the current quarter.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) remains focused on enterprise customers. John Chen has slashed fees, and is currently trying to differentiate from rivals in the mobile device management (MDM) market. Its key sources of differentiation include application provisioning, security and identity management, and communications with BBM and secure voice. BlackBerry is set to launch BES12 in November this year. And the company has already started its EZ Pass program, which allows an enterprise to upgrade to BES12 from BES10 or a competitive offering for free.

BlackBerry ups the game with QNX and BBM

As far as its QNX operating system is concerned, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) has already won the Audi dashboard, which should start generating revenues in 2016. Apple Inc. (NASDAQ:AAPL) has entered the market with its CarPlay. Google Inc (NASDAQ:GOOGL) is another major rival. BlackBerry currently monetizes QNX as a software license. But the ailing Canadian company plans to broaden the QNX platform by adding its own or third party services such as infotainment, safety features, tire pressure, etc.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is looking for ways to monetize its BBM messaging service. Earlier this month, the company added many new features, including ‘stickers’, to BBM. As it already has a secure NOC infrastructure, the Canadian company is considering mobile payments, commerce, and identity management to generate revenues. It’s not a part of BlackBerry’s “2-year recovery plan,” but a direction BBM may take.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) shares were down 0.14% to $7.35 at 12:16 PM EDT on Thursday.

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34 COMMENTS

  1. if I have to go through the process of obtaining intellectual property, then Blackberry would be my last choice to present this handset. I would be stupid not to offer it to Apple or Android. The only reason my hopes were on Blackberry is because I thought they were desperate to try anything. What I see here is they would rather close shop then try anything. This only confirms my reason to say Blackberry is NOT worth investing in

  2. I’m sure Mr.Chen isn’t that hard to contact. Show up on his doorstep or one of his public appearances and present your device. Crackberry has plenty of concept devices that I personally think will crush all devices out in the market today but has Chen seen them? I don’t know. Apple has 1 device that brings in more than half of Apple’s revenue (the iphone). I agree with you all Blackberry needs is 1 solid device along with their software to conquer all the competition. And it don’t matter if the competition has 1000000 billion dollars. I’ve seen start-ups with little money on-hand surpass giant established companies just like Apple and Google.

  3. Its up to BLackberry to investigate this claim. They hired alica keys and nothing became of it. they paid Thorsten millions of dollars and nothing became of it. But they just cant take a stab in the dark and allow a three month probation period proving my theory. They put Thorsten in charge with out proof.

  4. I am seeing if I can possibly match you DEVVV. That is all. I am not the one claiming to be smarter than all the engineers in the IT industry. I agree I have asked you to stop and now you have asked me. How about we stop arguing and you either tell people your idea or you just stop!!

  5. its really too bad that Blackberry thinks like you, and its for that reason they will die. Blackberry is not bold and do not believe

  6. We simply don’t know what your quest is. We can not support you. Do you have something for us to buy? petition? an idea? If you let us know enough details we would be more then gladly be willing to support you. I would be capable of helping you if you would let us know enough about it. I am begging you to tell us. And if you don’t have anything to tell please please don’t keep on saying you have the next big idea

  7. IF they don’t take a chance and investigate this they wont make it in this competitive world. IF your not going to support Blackberry trying anything to save them selves, Then don’t bother reading my posts. And due to your negativity you can watch Blackberry die. So I am pleading for you to stop!!!!!!!!!

  8. Simply you can’t just send a letter saying you have the solution to all their problems without telling them what it is. I is not reasonable to think that Blackberry is going to spend their time seeing if everybody that says they have a great idea does. you will need to get several patents and several lawyers if you are worried about not being compensated. But as I have said before, I especially know that telling us on the internet that you have a great idea that you can’t say any details about just makes you seam irrational.

  9. software can be copied or improved very easily by competitors. but the handset cannot be as easily. This new device would not pose competition due to it would be in a class of its own, and I guarantee rivals will pay Blackberry royalties to copy it. I don’t only hope I know it will become the new standard in the industry. Its up to Blackberry to be bold and believe. why are you people not interested in Blackberry trying anything to fix themselves??

  10. I sent Blackberry a letter stating that I could provide them with what is needed for a fix. If they cant take the opportunity to investigate this claim at no risk to them they deserve to go under.

  11. It is true Blackberry needs a new competitive device to compete against Apple and Google. I do not believe software will be able to accomplish this alone.

  12. You might be right that Blackberry can not compete with their competitors. But please stop saying you have the solution without having a reasonable plan to have the public to ever see it. I am fine with you being the contrarian, as Eric apparently appreciates; although I am guessing he finds it more entertaining than anything; but it is coming across as if you have a bias opinion… making you not believable.

  13. Well stating things that are wrong are always negative! They might be right but by definition they are negative. Lets take you at the benefit of the doubt and say that you have the greatest hardware since the iPhone. This is only important if you are able to convince other people of it. For this you will need to know more about rhetoric. In particular, you will need to convince people through the three main parts of rhetoric: Ethos (Credibility), Pathos(Emotional), and Logos (Logical)(http://courses.durhamtech.edu/perkins/aris.html). If you can not do this you will not be effective. I find it highly unlikely that you will be able to build credibility, in particular, through comments on the web. If your plan is, and it appears to be, to just tell people that is is a great idea, you have not and will not accomplish anything. And in this case I am pleading for you to stop!!!!!!!!!!!!!!!!!!

  14. Sorry to say Felix Blackberry cannot afford to compete against Apple and Google. This is why Blackberry needs my device, and Apple and Google will follow their lead. This will restart the industry, I don’t hope or wish it I know it.

  15. Eric if you ever hear that Blackberry finally decides to give this crazed fool a opportunity (three months required) to work for them. This will be the indicator to buy as much BBry stock as you can. I know for a fact my device design is the next generation smartphone.

  16. how do you know I’m pretending?? Blackberry did not see the design to know whether to turn it down or not. The reason Chen does not care is because he gets to win whether he fails or not Thorsten did. Blackberry was meant to develop this device, if they do not they will be done.

  17. How is stating when someone is doing something wrong being negative???
    My intent is to provide Blackberry with the correct hardware device. you supporting what Blackberry is currently doing is causing a negative impact on the company. You are steering Chen in the complete wrong direction by supporting him. So you please stop it!!! My purpose is, if Blackberry does not investigate and manufacture my device design they will run out of money. The reason Blackberry handset division is suffering is due to completely wrong design. So please quit supporting them in doing the wrong thing that only encourages them to continue.

  18. The iphone and android devices are for kids and unprofessional adults. If you want devices to keep tabs on justin beiber and mily circus or are interested in playing with the apps those devices offer then keep buying those unsecure devices, but if your serious about whether or not your device is getting hacked while making a trade or monitoring your bank account or any business or financial transaction you do on your mobile device then I suggest a Blackberry, plain and simple. Blackberry offers the only real secure software. All those apps need your permission to have full access to your device to “run”, and you fools are giving the app owner this permission!? Is that smart? I don’t think so.

  19. Please keep posting DEVVV, I really love reading your posts that shine light on the propaganda for blackberry. We need more people like you here. Keep up! I wouldnt want to invest in BBRY because I read some bullshit article that was misleading like most of them. You save people money!!!

  20. do not underestimate the power of delusion … he pretends to have some revolutionary handset design; it might have been turned down by BBRY, but it looks like this guy spends all his time on the net, so that “design” could mighty well be a back-of-an envelope dribble-scribble

  21. The guy is an ugly troll. He’s not a normal investor. He’s just mad. Mad at BlackBerry who may have stood him up in the past.

  22. How do you comment on every article ever release to the internet about blackberry? You are also very negative in all your comments. With all this effort one would think that there must be a purpose but I haven’t figured it out yet. Basically, from all of us that have to come across your comments every time we read an article… please stop – we have heard, and understand, your way of thinking on the subject.

  23. With Microsoft introducing office for the ipad for enterprise and the healthcare market, how is Blackberry going to compete with this? Now Apple has patented a 3D type display screen for use on the ipad for the healthcare market. Blackberry does not even have a proper tablet yet. I don’t think Blackberry is a good buy for investors right now. It appears Apple and Google has taken the enterprise and healthcare market. The only way Chen is bringing down spending is by firing people rather then making money. Shrinking a company only makes it worth less and less. Getting into the healthcare region, only poses high competition which can be very costly. Apple and Google already beat them there.

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