BlackBerry CEO hoping to avoid future layoffs, expects to be profitable by 2016
This morning's earnings report may not have been BlackBerry's brightest moment, but John Chen seems confident in the company's future — and his ability to turn things around.
Context & Ripple Effects
John Chen's first full quarter running BlackBerry lands alongside brutal numbers: syndicated reports put the quarterly loss at a massive $4.4 billion on plunging revenue, with write-downs tied to the failed device cycle he inherited. The same-day announcement that Chen hopes to avoid future layoffs signals a deliberate contrast with predecessor Thorsten Heins' deep cuts — retention becomes part of the turnaround pitch.
Chen pairing the loss with a concrete profitability-by-2016 target is a credibility bet, and the Foxconn manufacturing partnership reported by TechCrunch and Engadget is his first structural move: outsourcing entry-level hardware so BlackBerry stops carrying its own phone-building costs while it reorients around software and services.
First-order effects
- BlackBerry employees get an explicit signal that the layoff wave is meant to stop, stabilizing a workforce that has absorbed repeated cuts through the Heins era.
- Chen has publicly committed the company to profitability by fiscal 2016 — a deadline investors and board members can now hold him to each quarter.
Second-order effects
- The Foxconn arrangement moves low-end production risk onto a partner, letting BlackBerry chase emerging-market buyers with cheaper BB10 handsets without expanding its own manufacturing footprint.
- Rivals at the budget end of the Android and Windows Phone markets face a competitor whose cost structure no longer depends on in-house factories, changing how price wars in sub-$200 devices are fought.
Third-order effects
- If the pattern holds, BlackBerry completes a transition from vertically integrated handset maker to a leaner company anchored in enterprise services, messaging, and QNX licensing — the model Chen is describing publicly.
- A successful outsourced-hardware-plus-services playbook would give other struggling OEMs a template for surviving the post-iPhone consolidation of the smartphone industry.
The trend: Struggling smartphone makers are responding to commoditized hardware by shedding in-house manufacturing and rebuilding themselves around software and services, with turnaround timelines set by new CEOs.