BlackBerry to cut sales ties with T-Mobile

BlackBerry (NASDAQ:BBRY) is essentially going to sever ties with T-Mobile US (NYSE:TMUS) just weeks after the two companies' CEOs got into a spat over T-Mobile promoting the iPhone to its BlackBerry customers. The development represents a severe escalation, although relations between the companies have been souring since last year.

The smartphone maker said it will not renew T-Mobile's license to sell BlackBerry products when it expires on April 25. Existing BlackBerry customers on T-Mobile should not see any difference in their service or support, BlackBerry said in a statement. BlackBerry said it will "work closely with T-Mobile to provide the best possible customer service" to any BlackBerry customers remaining on T-Mobile's network or to any customer purchasing BlackBerry devices from T-Mobile's existing inventory.

BlackBerry also said it is working closely with other carriers to give consumers and enterprise users alternatives if they want to switch from T-Mobile and continue using BlackBerry "for their long-term device and service needs."

"BlackBerry has had a positive relationship with T-Mobile for many years. Regretfully, at this time, our strategies are not complementary and we must act in the best interest of our BlackBerry customers," BlackBerry CEO John Chen said in a statement. "We hope to work with T-Mobile again in the future when our business strategies are aligned."

Chen added that the company is "deeply grateful to our loyal BlackBerry customers and will do everything in our power to provide continued support with your existing carrier or ensure a smooth transition to our other carrier partners."

T-Mobile representatives did not immediately respond to a request for comment. However, T-Mobile CEO John Legere on Twitter said that T-Mobile's loss of BlackBerry won't affect the carrier: "We value all customers but this is 1+% of our base total and a small fraction of what we add quarterly."

As the Wall Street Journal notes, BlackBerry's share of the U.S. smartphone market has shriveled to less than 1 percent, according to research firm IDC. However, for a company of BlackBerry's statute to basically end a relationship with a major U.S. carrier is rare.

Under a promotion that ran from mid-February to early March, T-Mobile offered its existing BlackBerry customers up to $250 in credit if they upgraded to a new BlackBerry Z10 or Q10 phone. If the carrier's existing BlackBerry customers chose to upgrade to a different device, including an Android phone or an iPhone, the carrier said it would give them $200 in credit.

The promotion was announced on Feb. 19, a day after Chen blasted T-Mobile for sending a promotion to the carrier's BlackBerry customers urging them to switch from BlackBerry to an iPhone 5s. Chen wrote in a company blog post he was "outraged" over the promotion and puzzled as to why BlackBerry was not informed of the promotion beforehand. The spat included sharp ripostes from Legere on Twitter.

T-Mobile's original promotion sparked anger among BlackBerry fans. However, 94 percent of all the customers who traded in their BlackBerry phones during the promotion switched to non-BlackBerry devices, according to the blog TMoNews.

Even before the public brouhaha in February, T-Mobile was not exactly a major BlackBerry backer. In September 2013, T-Mobile said it planned to stop carrying BlackBerry smartphones in its stores and instead would ship the devices directly to customers who want them. It's unclear how many BlackBerry customers T-Mobile has.

For its latest quarter BlackBerry posted a net loss of $423 million, which was less than analysts had expected, according to Bloomberg. It's also down from the massive $4.4 billion loss BlackBerry took in its fiscal third quarter and compares to a net profit of $98 million in the year-ago period. However, likely as a result of continued weak BlackBerry smartphone sales, total revenue for the fiscal fourth quarter came in at just $976 million, slumping 18 percent from $1.2 billion in the fiscal third quarter and down 64 percent from $2.7 billion in the year-ago quarter.

Chen is seeking to revive BlackBerry's fortunes with a greater focus on the enterprise market and new smartphones with physical keyboards.

For more:
- see this BlackBerry release
- see this Bloomberg article
- see this WSJ article (sub. req.)
- see this The Verge article

Related Articles:
BlackBerry sells 2.3M BB 7 devices, and just 1.1M BB10 phones, but CEO remains upbeat
Report: 94% of T-Mobile BlackBerry customers who traded in phones switched to another platform
BlackBerry to focus on enterprise, releases 2 mid-range phones, the Z3 and Q20
T-Mobile to offer BlackBerry users $250 in credit to upgrade to new Z10, Q10
BlackBerry CEO Chen slams T-Mobile for enticing BB users to switch to iPhone

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