BlackBerry reported a massive $4.4 billion loss in the third quarter and 56 percent drop in revenue in its first results under new chairman and interim chief executive John Chen who hopes to make the company profitable again by 2016.
BlackBerry also announced Friday it is entering into a five-year partnership with Foxconn, the Taiwanese company that assembles products in vast factories in China. Foxconn will jointly design and manufacture some new BlackBerry devices and manage the inventory of them.
"I'm hoping we never have to have a conversation going forward about inventory write downs," Chen said on a conference call with analysts.
Chen said he thinks BlackBerry "has a really good shot" of turning a profit in 2016 and said management will try its best to achieve that. Chen later laughed when an analyst wished him "best of luck."
The former Sybase CEO is credited with turning around Sybase, a data company that was sold to SAP. He said turning BlackBerry around would be his most "complicated' challenge but said the company has $3.3 billion in cash and that will "definitely allow us to engineer our turnaround."
"We are no longer worried about whether we're going to be around," Chen said.
BlackBerry reported revenue of $1.2 billion, down from $2.7 billion in the same quarter last year.
Chen has said the company "is very much alive" but is putting more emphasis on Blackberry's software business than its hardware business. He said first Foxconn's BlackBerry phones will be released in March or April and will be built in Indonesia.
"I'll be happy to have a breakeven or a low margin device business and then have that help us to monetize software," Chen said.
BlackBerry said it sold just 1.9 million smartphones in the quarter compared to 3.7 million in the previous quarter and said most of them were old BlackBerry 7 devices. This year's launch of BlackBerry 10, its revamped operating system, and fancier devices — the touchscreen Z10 and Q10 for keyboard loyalists — was supposed to rejuvenate the brand and lure customers. But the much-delayed phones failed to turn the company around and have led to a billion dollar loss last quarter and a multibillion loss in the third quarter.
"It was ugly, said Colin Gillis, an analyst at BGC Partners.
Gillis said allowing BlackBerry to be made by Foxconn could pose a problem for a company that relies on governments for a lot of its business. BlackBerry has long emphasized security.
"It opens up some security concerns. If you are a government agency with national security data running through your phones do you have concerns now that they are made by Foxconn," Gillis said.
Apple Inc.'s products are assembled by Foxconn in vast factories in China.
BlackBerry's net loss amounted to $8.37 per share in the latest quarter. Its adjusted loss from continuing operations, which excludes restructuring and other items, was $354 million, or 67 cents per share.
Analysts polled by FactSet, on average, expect an adjusted loss of 43 cents per share on revenue of $1.66 billion.
Shares of BlackBerry slipped 13 cents, or 1.8 percent, to $6.14 in morning trading Friday.
BlackBerry did report a strong cash position at the end of the quarter with the $3.2 billion and no debt.
The BlackBerry, pioneered in 1999, had been the dominant smartphone for on-the-go business people and other consumers before Apple introduced the iPhone in 2007 and showed that phones can handle much more than email and phone calls. In the years since, BlackBerry Ltd. been hammered by competition from the iPhone as well as Android-based rivals.
Chen is putting more emphasis on BlackBerry's mobile device management business, which allows IT departments to manage different devices connected to their corporate networks. He is also emphasizing BlackBerry's popular BlackBerry Messenger application that is now also available on Apple and Android devices. And he is also emphasizing Blackberry's embedded QNX software systems, which are used in-vehicle infotainment systems and industrial machines.