BlackBerry devices future rides on fortunes of new Android phone-CEO

Fri Sep 25, 2015 4:47pm EDT
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By Euan Rocha

WATERLOO, Ontario, Sept 25 (Reuters) - BlackBerry Ltd's decision to roll out a smartphone powered by Google's Android platform was hotly debated internally but the gamble is necessary to test whether the company's handset business is viable, Chief Executive John Chen said on Friday.

Waterloo, Ontario-based BlackBerry confirmed it planned to introduce an Android smartphone later this year, even as it also reported weaker-than-expected quarterly results.

The move marks a shift away from its own BlackBerry 10 platform, which failed to regain market share ceded to Apple Inc's iPhone and a slew of Android-powered devices.

"I merely look at this as a business decision: If the math doesn't add up, it doesn't add up," Chen said at a media roundtable. "We could keep our pride and die hungry, or we eat well and be less proud. I chose to eat well."

Chen said he would make a decision on the future of the handset business in the next fiscal year, which begins on Feb. 28.

BlackBerry, which is pursuing a turnaround based on selling more software, said it expected modest revenue growth in the remaining two quarters of this fiscal year, after nine quarters of falling sales. It expects to return to profitability in the fourth quarter.

The company's shares, however, closed down 7.7 percent at $6.49 on Nasdaq as existing BlackBerry 10 device sales sputtered in the fiscal second quarter. Overall revenue in the quarter fell 46.5 percent to $490 million.

Chen, who had initially targeted annual sales of 8 million to 10 million devices, now says BlackBerry needs to sell about 5 million to make its handset unit viable, as licensing and other costs tied to selling Android phones are lower than those for BlackBerry 10-based devices.

He said some enterprise customers and carriers were already testing the Android smartphone, and he hinted that the company could jettison its own platform if the device gains acceptance with its core base of government and financial industry clients.

BlackBerry expects the Android device to be on sale with at least some of the major North American carriers ahead of the crucial holiday season sales period, Chen said. (Editing by Lisa Von Ahn)