Troubled BlackBerry teams up with Foxconn

Stung by mounting losses, struggling smartphone maker BlackBerry is trying to make a comeback by stepping away from making hardware and turning to China's Foxconn Technology to develop and make new BlackBerry devices while the Canadian phone maker focuses on software development.

BlackBerry announced a five-year handset joint venture with Foxconn, the world's largest contract manufacturer of electronics and a major supplier of iPhone maker Apple Inc.

Under the agreement announced Thursday, the Taiwan-based company will develop and make new BlackBerry devices in Indonesia and Mexico, allowing BlackBerry, of Waterloo, Ontario, to concentrate on corporate software and services, according to the companies' statement.

Blackberry CEO John Chen said the partnership, announced as BlackBerry swung to a $4.4 billion loss for its fiscal third quarter, would allow the company to "focus on what we do best" - design, security, software development and enterprise mobility management - while competing "more effectively" by leveraging Foxconn's "scale and efficiency".

Blackberry once dominated the mobile messaging space but has been losing market share for years to rivals Apple and Google Inc's Android operating system.

In an interview with financial news channel CNBC, Chen said he expected the partnership would help the smartphone company become profitable by 2016. BlackBerry's Nasdaq-listed shares surged 16 percent in Friday trading.

Foxconn Chairman Terry Gou called BlackBerry "an iconic brand with great technology and a loyal international fan base" and said he looked forward to "a successful strategic partnership" with the company.

In a conference call with analysts, Chen said he plans to increasingly shift the design and development of handsets targeting developing markets to Foxconn. In the short term, BlackBerry's North American design team will focus on smartphones aimed at enterprise users, the CEO said. "That does not imply over the long term that we won't get ourselves back into the consumer space, but in the foreseeable future until we get our finances back on solid footing, that is what we will do," Chen said.

The partnership's first project will be to develop a low-end handset for BlackBerry's Indonesian market, expected to be released next March or April, Chen said. The phone will be produced at a new factory Foxconn is building in Indonesia.

Jan Dawson, an analyst with Jackdaw Research in Provo, Utah, called the deal a milestone. "BlackBerry was always first and foremost a devices company," Dawson was quoted by Bloomberg News. "Now they're outsourcing a big chunk of that business and focusing more on other things."

BlackBerry's big loss for the quarter ended November 30 reversed a year-earlier $9 million profit, the result of more than $2.7 billion in charges. Revenue plunged 56 percent to $1.2 billion as consumer and enterprise customers gave a lukewarm welcome to the company's new BlackBerry 10 operating system. The tepid sales underscored the increasing popularity of smartphones based on the iOS and Android operating systems offered by rivals Apple Inc and Google Inc.

The joint-venture agreement comes three weeks after BlackBerry said it had ended acquisition talks. As part of a management shakeup, Chen, the former CEO of California-based enterprise and software services company Sybase, took over as BlackBerry CEO after his predecessor Thorsten Heins was fired.

michaelbarris@chinadailyusa.com