BlackBerry Retains Faith In Its Hardware Unit Despite Sales Drop
BlackBerry Ltd. (BB)’s new chief executive officer, has dismissed demands for the company to withdraw from the hardware business, as he tries to get an opportunity to convince investors that he has the time and vision to revive a unit that has pulling sales back down to 2007 levels.
John Chen, who was selected by BlackBerry’s largest investor for the position of CEO, has begun building his case that the company should keep its unprofitable Smartphone business, even as investors and analysts urge the company to focus on more lucrative software and services.
Analysts are estimating a 42% drop in revenue in its quarterly results Dec. 20, putting pressure on Chen to convince cynics.
Chen’s reluctance to pull the plug on the company’s involvement with hardware echoes the sentiment of his predecessor Thorsten Heins, who vowed when he joined in January 2012 not to break up the company.
BlackBerry also announced the hiring of John Sims, a former colleague of Chen’s at Sybase Inc. and SAP AG, to run global enterprise services.
Two additional executives were also named. James Mackey, an SAP veteran who most recently worked at Open Text Corp., is now leading corporate development and strategy for BlackBerry. Mark Wilson, formerly of Sybase and later with Avaya Inc., was appointed to oversee marketing.
Heins, who stepped down last month, had bet that a new operating system with a faster Web browser and snappier navigation would put BlackBerry back in the game with Apple Inc. (AAPL)’s, iPhone and Samsung Electronics Co.’s Galaxy lineup.
Delays to the release of BlackBerry 10 — and the decision to put the touch-screen Z10 version on sale first — alienated the BlackBerry faithful, who were forced to wait for the Q10 model that came with a physical keyboard.
BlackBerry will probably report sales of $1.58 billion and a loss of 45 cents a share, excluding one-time items, according to the average estimate in a Bloomberg survey of analysts.
The company took a write-down of almost $1 billion in September for unsold Z10s and reported a 45% decline in year-over-year sales to $1.57 billion.