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BlackBerry CEO gives one year deadline for handset profitability

James Pearce
June 23, 2016

Speaking at Canadian manufacturer’s Annual General Meeting, Chen said handsets alone would not be enough to secure BlackBerry’s future

BlackBerry CEO John Chen says the manufacturer’s top target for this year is making its devices division profitable again.

Speaking at the Canadian vendor’s annual general meeting yesterday (June 23), Chen admitted BlackBerry could weigh up the future of its phone making arm if it does not return to profit within the next twelve months.

“The device business must be profitable, because we don’t want to run a business that drags onto the bottom line,” Chief Executive John Chen told investors at the AGM. “We’ve got to get there this year.”

Chen also admitted the future of the Canadian firm will not be drive by its handsets, which have plummeted in terms of sales over the last five years.

He added: “I don’t personally believe handsets will be the future of any company.”

Financial results

His words came as BlackBerry posted its latest financial results, which saw consolidated Q1 revenue fall from $658 million ($450 million) to $400 million (£260 million) year on year.

Overall, BlackBerry posted net losses for the quarter of $670 million (£450 million), compared with a profit of $68 million (£45 million) on the three months up to May 30 last year. Excluding one time items, it posted a profit of $14 million (£9.42 million).

Its “Mobility Solutions” division, which now includes its smartphone business and device software licensing arm, saw losses of $21 million on revenues of $152 million. This was the first time the manufacturer has broken down its financials in this way, so no comparative figure was available.

In a financial statement, Chen added: “BlackBerry is differentiated by cross-platform market leadership in software, an end-to-end secure mobility platform and a strong financial foundation. Our Q1 results highlight these attributes.

“Excluding IP licensing, we have more than doubled our software revenue on a year-over-year basis for the second consecutive quarter, driven by our EMM, secure messaging and QNX embedded software businesses. In our Mobility Solutions business, our objective is to achieve operating profitability in the short term,” said John Chen, Executive Chairman and CEO, BlackBerry.

“Our current plan calls for continued investments to expand our addressable markets and drive sustainable profitability and revenue growth. For the full fiscal year, we are on track to deliver 30 percent revenue growth in software and services. Based on a more efficient operating model, we expect a non-GAAP EPS loss of around 15 cents, compared to the current consensus of a 33 cent loss. We also expect to generate positive free cash flow for the full year.”

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