Leaks push Black Berry to reveal Android phone.
WATERLOO, Ont . • John Chen finally revealed the thing he believes will cure Black-Berry Ltd.’s flailing handset business and make the Waterloo, Ont.-based company relevant to the average consumer: a new slider phone, built with a keyboard and a curved touchscreen, called Priv, which is short for privacy.
A barrage of leaks spurred him to disclose Friday the existence of a product that has been a year in the making, that the chief executive has long denied and one he would have rather kept under wraps at least until next month. Chen has high hopes for Priv because this device is unlike the others: It’s powered by Google Inc.’s Android and will offer users access the millions of mobile apps available for download on Google Play.
The device is to hit the market before Christmas, and the stakes for Black-Berry and Chen are high. In its second quarter ended Aug. 29, the one-time smartphone giant recognized a mere 800,000 devices at an average selling price of $240, which amounts to close to 40 per cent of total revenues. Even the diehards who work at Black-Berry or blog about it are warming up to Priv the hybrid, Chen said.
“There’s a lot of heritage here, there’s a lot of pride and I respect that,” Chen told reporters. “We could keep the pride and then die hungry, or we can eat well and be not so proud. I chose to eat well.”
Even with access to the 240,000 apps inside Amazon.com Inc.’s Appstore, Black-Berry phones have not catered to heavy app users. “I am now going to eliminate apps as an excuse not to use Black Berry phones,” he said.
Investors, se e mingly, weren’t as impressed. Shares of Black Berry tumbled US54 cents or 7.7 per cent Friday in New York to US$6.49, with the losses mounting right before the closing bell. It has fallen 41 per cent this calendar year.
The lacklustre results the company posted Friday didn’t help investor confidence. The Waterloo, Ont. company recorded a wider-than-estimated second-quarter loss excluding some items of 13 cents per share and its revenue of US$491 million missed analyst expectations by a fifth.
The nascent software and services division realized revenue of US$74 million, up 19 per cent compared to the same period last year. As the company attempts to de-clutter the plethora of offerings, Black-Berry did book 2,400 transactions in software, including clients Airbus SAS, Peugeot and LG Electronics Inc.
But it’s down from sales of US$137 million in the first quarter that included proceeds from a cross-patent licence-sharing arrangement with Cisco Systems Inc. Chen was expecting another one of this kind, but the terms didn’t come together before Aug. 29.
“I do expect it to be in this coming half year,” he said. On the call, Chen said he’s “not satisfied” with revenue and profits, especially the sluggishness in devices.
But Chen said he sees better days ahead for Black -Berry.
“I actually do expect to see Q3 revenue higher than Q2, Q4 revenue higher than Q3. I didn’t say how much higher, but I do see the uptick,” he added.
He said he is also encouraged by what’s coming down the pipeline, the sales from Good Technology Corp. added to his books once the US$425-million transaction closes and the lift he expects Priv to give Black-Berry when it launches before Christmas and sees the fruits of his investments.
“It’s important for us to invest in the best sales organization. It’s important for us to invest in this phone,” Chen told reporters. “Because you can cut so much that you start losing any traction of growing.”