John Chen, CEO of BlackBerry, joined Bloomberg Television’s Emily Chang to discuss the company’s fourth-quarter results released today and outlook for the company.
When asked about his confidence in turning BlackBerry around, Chen said “I feel better every day. The results show that….We are losing less money. Cash positions are quite good. Products are being developed. Strategies are laid out, out there. I feel very good about our chances, going forward.”
*’WE ARE LOSING LESS MONEY’
*WE ARE DESIGNING HIGH-END PHONES FOR ENTERPRISE
*NO COMMENT ON WHITE HOUSE TESTING DEVICES
*COMFORTABLE WITH COMPANY’S POSITIONING IN GOV.
*BBM MESSAGING SERVICE HAS 85M ACTIVE USERS
source: Bloomberg Television
EMILY CHANG: The man in charge indeed, John Chen, CEO of BlackBerry, joining us right now. John, you’ve righted the ship. You’ve stabilized the ship a quarter earlier than even you said you would. Why not set more aggressive targets for profitability and cash flow?
JOHN CHEN: Well —
CHEN: Hi, Emily. Well, obviously, we could see it, we will, but I think it is important that we take it a step at a time. It is a long journey back. But I could see that we could make progress along the way. So today is just one of those examples that we were showing some good progress up front.
CHANG: Shares are up some 20 percent since you took over, John. When you took this job, though, some people thought you were crazy. How confident are you that you can really turn BlackBerry around, compared to when you started four months ago?
CHEN: Oh, I actually — I feel better every day. The results show that. All the indicators like a health check (ph), all the indicators are doing well. The cash firms are doing much better. Inventories are doing much better, in terms of managing of that and reduction of that. We are losing less money. Cash positions are quite good. Products are being developed. Strategies are laid out out there.
I feel very good about our chances, going forward.
CHANG: How about a morale check? How is morale doing?
CHEN: That actually is probably one of the better stories. I think in the last four months we had to go through a lot of ups and downs. We had to do some very difficult things that impacted employees and so forth. We definitely are at a tail end of all that journey. We are looking forward for the growth, for the possibility and looking forward for the engagement, not only the outside but as well as inside the company.
And I just did a town hall meeting and things are starting to gel, starting to gel. Still got work to do, but people are feeling better.
CHANG: Now you laid out some key areas for growth in software and services. What about hardware? We know that BlackBerry shares in the global smartphone market has dropped below 1 percent. How much can you actually change that number?
CHEN: Well, I do not know where you got the below 1 percent. The numbers keep bouncing around everywhere. We still have quite a healthy business because, as you can probably see from our release, we sold over 3 million handsets in the last quarter.
So if you multiply that on an annualized rate, that is about 12 million to 15 million handsets. So I wouldn’t — I mean, it is not a humongously big number, but it’s not a very small number, either. We have a number of relationships out there. You probably know that we have a Foxconn relationship. That was going to push some of the phones, lower-end phones, in the emerging market. We also are designing some really high-end phones here in Waterloo and Ottawa and many different places around the world.
And then those phones will do well. I truly expect them to do well, in the — especially in the enterprise space. So we will come back.
CHANG: Just so you know, John, I was looking at Q4 numbers from IDC in terms of those market share numbers. What about the White House? There have been reports that they are testing Android. They’ve been long-time — the president has been a long-time BlackBerry user. How much are you lobbying them to stick with BlackBerry?
CHEN: I do not lobby the White House. That’s the number one thing. We only just make sure that they know our roadmap, they understand where we are going, in terms of boosting our security, our productivity profiles, and the technology behind it.
And so I cannot comment on White House testing any other devices because this is obviously their choices. And I am sure that the White House would want to know everything that there is to know out there, different types or variations. And I respect that.
But I still believe that BlackBerry is the choice. As you can see, (INAUDIBLE) yesterday or a couple of days ago, announced that we want some sort of occasion (ph) to be able to run on the DOD network. We are the first one who has that. So I am comfortable in our positioning in the government.
CHANG: What about becoming like a Google Android for mobile business users, but only software and services and getting rid of the hardware completely? Wouldn’t that be more profitable?
CHEN: Well, we are an end-to-end solutions. And I think we have to see how the market develops. But right now it is important for us to provide all components of that solution.
I just want to remind you, we are not only on the handset side and the server side, we are also in the messaging side like PPM (ph) and we also have our own locks (ph), which makes us the most reliable and most available of the network out there. And then we have the embedded (ph) technology that we literally have the market — the lion’s market share of the embedded car world.
So there is a lot of good technology. And when you string it together, it’s really an end-to-end solution set. Now that doesn’t mean we can’t apply the same technology and our path into other people’s devices. But that remains to be seen. At this today, we have some uniqueness in our handset that a customer likes.
CHANG: Now you mentioned BBM. You’ve introduced a newer, more secure version of BBM, lots of stuff going on in the messaging space, Facebook buying. What stop — you know, what do you see as the future of BBM? Do you see this competing in banking chat rooms? Why wasn’t BBM WhatsApp?
CHEN: Why wasn’t BBM WhatsApp? We are very focused — so BBM is actually something, like you pointed out, there is a lot of security built around it. I believe that the government and the regulator industry love using it.
So we are creating more hard-hitting features, more communication and collaboration features. We see a really good future of BBM focused on the enterprise. That will go hand-in-hand and align with our server strategy. And that would make us a very, very big differentiator — you know, give us the differentiation among all the social messaging systems out there. We do have 85 million or so monthly active users and over 115 (ph) million registration. And that number will continue to grow because we just announced not long ago, we put it on the Windows mobile devices, as well as the Nokia X (ph) devices. And they actually embedded that in multiple different countries.
So there is a lot of momentum on building more registration. And I need to tie that into the enterprise play with our server. And I believe that is going to be a strong growth. And it is very focused on the enterprise world. We do have a consumer play out there, which we’ve technically would do well. And we are going to continue to push on that also.
CHANG: So how about cars? You have a strong foothold in cars, Apple and Google and Microsoft are there as well. How do you see that playing out? I know you have a really interesting vision for the future for the Internet of things.
CHEN: Yes. We tried it last time — you know, it’s really about the long-term strategy of BlackBerry has to tie with the fact — has to be in Internet of all things, all things Internet, and everything connected. And so yes, we are doing phones today. It is really about the device and about device talking to different device.
You started about cars, so that’s the other end of the spectrum, which is so-called the connected car world. We own the lion’s share of the market, in terms of infotainment , car management systems on the dashboard and all of that with our technology called QNX. It is a secure microkernel technology that there are lot of — over half of the industry uses it.
And it is compatible with the other device, you know, the Apple Play, Car Play, what Google has, you know, working on and as far as Microsoft. There is a consortium out there, we — which we are one of the leading providers and leading thought providers of that consortium.
So I am very comfortable about our car position or the connected car positions. And then that should, by the way, give you a hint of we would like to continue to branch out to adjacents. There will be connected homes, there will be connected everything. And that will become all things Internet.
CHANG: All right, John Chen, CEO of BlackBerry, we’ll continue to watch you as you try to turn this company around. Thank you so much for joining us.
CHEN: Thank you, Emily.