It's
the end of an era for BlackBerry. The company, famous for making
cellphones with physical keyboards that were once so popular people
nicknamed them Crackberries, has decided to stop making its own
devices.
BlackBerry
said on Wednesday that it will rely on partners to manufacture the
phones, which will still have BlackBerry's look and feel.
The
company announced a joint venture with an Indonesian telecom company
that will start making them. BlackBerry plans to turn its attention
to software, a move it has made gradually in recent years as sales of
its phones have slid.
Shares
of BlackBerr (BBRY,
Tech30)rose
4% in early trading after the announcement. But the stock price is
well below its peak from several years ago.
BlackBerry
was once the phone of choice for Wall Street traders, politicians and
celebrities, thanks in part to its well-regarded security system.
President Obama was spotted with a BlackBerry. So was Kim Kardashian
West.
But
the company was too late to the touchscreen game, and customers left
in droves for Apple' (AAPL,
Tech30)iPhone,
Samsung' G (SSNLF)alaxy
and other devices running on Google' An (GOOGL,
Tech30)droid
system. Even Microsof has (MSFT,
Tech30)
moved ahead of BlackBerry with its Windows Phones.
CEO
John Chen has tried to turn the company around since joining in 2013.
But even as he has pushed BlackBerry toward mobile and security
software, apps and the plethora of connected devices known as the
Internet of Things, BlackBerry has bled red ink, posted sharp sales
declines and lost customers.
Chen
has even done what was once unthinkable, opening the BlackBerry to
other operating systems. The company now sells phones that run on
Android. It also killed off its BlackBerry Classic line of phones
this summer.
So
Chen deserves credit for stabilizing BlackBerry and refocusing it on
higher growth areas.
The
company is also no longer in danger of going under, a legitimate
concern investors had before he took control. BlackBerry now has
about $2.5 billion in cash and investments on its balance sheet --
money for a proverbial rainy day.
BlackBerry
will need all the cash it can get. The company also reported
Wednesday that its latest quarterly sales fell about 30% from a year
ago.
And
BlackBerry said that it expects to break even this fiscal year at
best. That's still better than the loss analysts had forecast.
But
if Chen can't get the company's sales growing again and return it to
profitability, there could be more pressure on him to sell
BlackBerry.
That's
exactly what Chen has done in the past. He sold the struggling
software company Sybase to SAP (SAP,
Tech30)
for a hefty premium while he was CEO of Sybase.
There
has been chatter about a BlackBerry sale for years.
The
rumor mill may start turning again, though. BlackBerry also announced
Wednesday that CFO James Yersh was stepping down and that he would be
replaced by Steven Capelli, who worked with Chen at Sybase.
Chen
and Capelli also worked together at Pyramid Technology in the
mid-1900s, a company that was sold to Siemens under their watch.
So
BlackBerry investors might be hoping that lightning will strike three
times and Chen and Capelli can pull off another sale.
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