BlackBerry (Nasdaq: BBRY), the struggling smartphone maker, struck a five-year deal with Apple supplier Foxconn Technology to make its devices, following another quarterly plunge in sales and mounting losses.
Foxconn will manufacture products for BlackBerry at plants in Indonesia and Mexico, according to a statement today. BlackBerry will own all of its intellectual property and handle quality assurance on devices through Foxconn, the world’s largest manufacturer of electronic products.
Sales in the three months that ended Nov. 30 fell 56 percent to $1.19 billion, the Waterloo, Ontario-based company said today in a statement. That missed the average estimate of $1.59 billion in a Bloomberg survey of analysts. BlackBerry posted a loss from continuing operations of 67 cents. Analysts estimated a loss of 46 cents.
BlackBerry Chief Executive Officer John Chen, hired last month after the company abandoned a plan to sell itself, is trying to restore confidence among both investors and corporate customers, who he says will be the focus of BlackBerry’s efforts in the future. The exploration of a sale loomed over most of its fiscal third quarter, having been announced on Aug. 12 before being scrapped on Nov. 4. That may have deterred customers from upgrading.
“The near term will be very challenging,” said Pierre Ferragu, an analyst with Sanford C. Bernstein in London. It’s “difficult at this stage to have a conviction that BlackBerry can succeed.”
[BlackBerry operates two R&D offices in Cary, N.C.]
Inventory Writedown
The company also said today that it’s taking a charge of $4.6 billion for assets, inventory and supply commitments it is writing down.
Chen, who is credited with reviving software maker Sybase Inc. before it was sold to SAP AG, has already begun making big management changes. Three weeks after his Nov. 4 start date, BlackBerry’s marketing, finance and operations chiefs left the company. This week Chen appointed former SAP executives as BlackBerry’s new heads of enterprise services, corporate strategy and marketing.
BlackBerry’s share of the global smartphone market tumbled to just 1.7 percent in the third quarter from 4.1 percent a year earlier, according to IDC. Android, the Google Inc. operating system used by Samsung Electronics Co. and others, had an 81 percent share, and Apple’s iOS had 13 percent, IDC said.
That’s left investors skeptical of Chen’s chances of turning BlackBerry around. The stock has fallen 20 percent through yesterday’s close from Nov. 1, the last trading day before he took over. It rose 3.1 percent to $6.25 yesterday in New York and remains more than 95 percent below its 2008 high.
