BlackBerry's Chen: We're not exiting the devices business

BlackBerry (NASDAQ:BBRY) CEO John Chen said the company is not going to get out of the devices business, despite giving an interview in which he indicated that it might be a possibility.

"I want to assure you that I have no intention of selling off or abandoning this business any time soon," Chen wrote in a company blog post.‎ "I know you still love your BlackBerry devices. I love them too and I know they created the foundation of this company. Our focus today is on finding a way to make this business profitable."

According to a Reuters report, Chen said he would consider exiting its handset business if it remains unprofitable. BlackBerry has recently turned more attention to its enterprise services business as well as its BlackBerry Messenger service and QNX embedded systems unit, though the devices unit remains a pillar of the company.

"If I cannot make money on handsets, I will not be in the handset business," Chen said in an interview with Reuters, adding that the time frame for such a decision was short. He did not provide more specifics, the report said, but said it should be possible to make money off shipments of as few as 10 million devices a year.

Chen wrote in the blog post that his comments "were taken out of context."

"BlackBerry is not a handset-only company. We offer an end-to-end solution and devices are an important part of that equation," Chen added. "That's why we're complementing our Devices business with other revenue streams from enterprise services and software, to messaging. We're also investing in emerging solutions such as Machine to Machine technologies that will help to power the backbone of the Internet of Things. We will do everything in our power to continue to rebuild this business and deliver devices with the iconic keyboard and other features that you have come to expect from this brand.‎"

During its latest quarter, its fiscal fourth quarter, BlackBerry sold around 3.4 million smartphones to end customers, but 2.3 million were older BlackBerry 7 devices and just 1.1 million were newer BlackBerry 10 phones. In its fiscal third quarter, BlackBerry sold 4.3 million BlackBerry smartphones to end customers, and again only 1.1 million were BlackBerry 10 smartphones. Right now, BB10 momentum is clearly stalled.

Chen told Bloomberg he is giving himself two years to overhaul the company and hopes to offset declining handset revenue with sales from BlackBerry's QNX business and other units. In the worst-case scenario in which he misses his goal of generating cash flow by this fiscal year, Chen said he'll have six to eight quarters to replace declining smartphone sales with software and services revenue.

"I don't have a plan to get rid of handsets, I have a plan to not be dependent on handsets," Chen told Bloomberg. "All I need to do is replace the handset revenue, and this company will be very different."

As Re/code notes, Chen is speaking to two different audiences. In the interviews, he's likely primarily targeting his comments at Wall Street analysts and investors, and the blog post is likely aimed at assuaging concerns of loyal BlackBerry users.

Meanwhile, according to CNET, Chen confirmed that the forthcoming phone previously known as the Q20 will officially be renamed the "BlackBerry Classic." Chen first teased the Q20 in February at Mobile World Congress in Barcelona, and said the "Classic" was something of a nickname because of the phone's traditional physical keyboard and trackpad. The goal is to get loyal BlackBerry users who like the keyboard to upgrade to the new phone and its BlackBerry 10 operating system.

BlackBerry plans to mostly build keyboard-centric devices, Chen said, but added that it will use touchscreen phones as well, including the Z3 aimed at emerging markets.

The Z3 will have a 5-inch screen, run the latest BlackBerry 10 OS, version 10.2.1, and will be made by Foxconn. Chen did not provide many other details but said the phone will a have a retail, unsubsidized price of under $200. The phone will make its debut in April in Indonesia. The phone will run on 3G networks but BlackBerry is planning a global LTE version.

The Classic will have a 3.5-inch touchscreen and keyboard with frets and sculpted keys. Chen has said the device will come out in the second half of 2014, but did not give a price.

For more:
- see this BlackBerry blog post
- see this Reuters article
- see this separate Reuters article
- see this Bloomberg article
- see this Re/code article
- see this CNET article

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BlackBerry to cut sales ties with T-Mobile
BlackBerry sells 2.3M BB 7 devices, and just 1.1M BB10 phones, but CEO remains upbeat
AirWatch Chairman on BlackBerry: 'Hope is not a strategy'
BlackBerry to focus on enterprise, releases 2 mid-range phones, the Z3 and Q20

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