After BlackBerry’s Rough Q2, Analysts Weigh In on Its Outlook

26 Sep 2015 | Author: | No comments yet »

BlackBerry CEO Says Worst Is Over After Posting Wider Loss.

CEO John Chen said Friday that the new phone, which is named after the privacy of its high-level security technology, will arrive before the end of this year in major markets.Buried within a BlackBerry press release for its fiscal 2016 second quarter results, the company confirmed the launch of its first Android device, Priv. Despite calls from some analysts for BlackBerry to scrap its own BlackBerry 10 operating system, the company says it doesn’t plan to make those sweeping changes for now. The company could jettison its own platform if the Android device gains acceptance with its core base of government and financial industry clients, Chen added. ‘In today’s hectic world where cyber threats are real for everyone, BlackBerry is making sure that our products invoke this mantra that your privacy is your privilege.

That much was evident Friday when the company confirmed—after months of leaks—that it is building a handset to run on Google GOOG -2.21 % ’s Android operating system. The shares slumped as much as 8.1 percent after the Waterloo, Ontario-based company reported a wider loss than analysts anticipated in the period ended Aug. 29. BlackBerry, whose smartphone market share has dwindled, said earlier this month that it would buy rival mobile software maker Good Technology for $425 million. It expects the deal to help win new clients for its services business, a priority as it shifts its focus to device management software for enterprise customers. ‘I’m happy to give them credit for patent licensing, but that’s not what we’re talking about in terms of high-value recurring revenue,’ said CIBC analyst Todd Coupland. The chief executive has been working to transform BlackBerry from the shrinking smartphone maker he inherited two years ago into a leading provider of security software for businesses.

This release is part of an effort to support Android for Work on BES12, a system used by enterprises that manages mobility across different operating systems, including Android, iOS and Windows. According to Evan Blass, who has posted images and is well known for leaks of new handsets, it will be launched on AT&T and is codenamed Venice – although will be called Priv when it launches. The move is seen as an acknowledgement that its revamped line of devices has failed to win mass appeal, according to four sources familiar with the matter. By changing operating systems, Chen is betting that combining BlackBerry’s reputation for security with Android’s huge market will stop losses from BlackBerry’s device division and allow the company to focus more on developing its software products. BlackBerry Chief Executive John Chen is banking on the company’s new device management system, BES12, that allows corporate and government clients to not only manage BlackBerry devices on their internal networks, but also devices powered by Android, Apple’s iOS platform and Microsoft Corp’s Windows operating system.

BlackBerry stuck to its goal of $500 million in revenue from this category for the full year that ends in February, but hitting that target will require acceleration in the year’s second half. BlackBerry shipped 800,000 phones in the quarter, the lowest in at least eight years, according to data gathered by Bloomberg. “The device business, I would say, is not dead yet but in bad shape.

Eight hundred thousand units is really nothing,” said John Butler, senior handsets analyst at Bloomberg Intelligence. “If that effort proves successful and the devices resonate with the core customer base they’ve always gone after, which is government and enterprise, then what’s the rational for sticking with a proprietary operating system with no apps?,” he said. BlackBerry needs to keep its own operating system because its most important customers — governments from the U.S., Canada and Germany — demand the security it offers, CEO Chen said.

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