For BlackBerry, the main aim this year is to make its device business profitable, said John Chen, BlackBerry’s CEO. On Wednesday at the company’s annual meeting, Chen told investors that the devices business must be profitable because they do not want to run a business that drags down the bottom line.
“We’ve got to get there this year:” BlackBerry CEO
The Waterloo-based company is weighing the future of its hardware operations, but the CEO looks firm on making the device business profitable this year. However, previously, Chen has said that a decision on the future of the unit would be made by September. The unit has sustained a steady drop in sales in recent years. At the meeting on Wednesday, Chen said he saw better opportunities in providing services that will allow increasingly commoditized hardware to do more.
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In the meeting attended by around 100 people, Chen said, “I don’t personally believe handsets will be the future of any company.”
Before being displaced by Apple and other competitors that run on Android, BlackBerry was the leader of the smartphone market, and now, it is is working to reposition itself as a service and software provider focused on device management for large organizations. In a presentation for investors, the Canadian firm said it anticipates that the broader market for its software will expand from $525 million in 2012 to $17.6 billion by 2019, powered by growth in the legal, financial, medical and automotive industries.
Shareholders losing patience
Some in the meeting were dubious about BlackBerry’s ability to deliver on its strategic pivot. One shareholder who refused to give his name said “the first word that comes to mind is lackluster,” adding, “Time is running out.”
BlackBerry wants to grow its software revenue 30% this fiscal year, repeated Chen, who took up the CEO role in 2013 with a reputation as a turnaround artist. However, the company’s stock has risen only modestly since then, and many investors are waiting for positive signs.
Ken Tota, an investor in BlackBerry’s biggest shareholder Fairfax Financial Holdings, said he appreciates the strategy and is optimistic that a renewed focus on security will help reinvigorate the Canadian firm over the next five years.
“It’s a niche, but it’s a worldwide niche,” Tota said.
On Wednesday, BlackBerry shares closed down 4.40% at $6.74. Year to date, the stock is down almost 28%, while in the last year, it is down by over 24%. The stock has a 52-week high of $9.63 and a 52-week low of $5.96.