BlackBerry’s top goal to make devices profitable this year: CEO

By Alastair Sharp

WATERLOO, Ontario (Reuters) – BlackBerry Ltd’s top priority this year is making its devices business profitable, its chief executive said on Wednesday, even as it weighs the future of its hardware operation.

“The device business must be profitable, because we don’t want to run a business that drags onto the bottom line,” Chief Executive John Chen told investors at the company’s annual meeting. “We’ve got to get there this year.”

Chen has previously said a decision would be made by September on the future of the unit, which has suffered a sustained drop in sales in recent quarters.

But at the meeting, attended by around 100 people, he said he sees better opportunity in providing services that enable increasingly commoditized hardware to do more.

“I don’t personally believe handsets will be the future of any company,” he said.

BlackBerry, once the smartphone market leader before being displaced by Apple Inc and competitors run on Alphabet Inc’s Android platform, has worked to reposition itself as a software and service provider focused on device management for large organizations.

In its presentation to investors, the company said it expects the broader market for types of software it is producing to expand to $17.6 billion by 2019, from $525 million in 2012 and below $4 billion in 2015, powered by growth in medical, legal, financial and automotive industries.

But some of those in attendance were skeptical about BlackBerry’s ability to deliver on its strategic pivot.

“The first word that comes to mind is lackluster,” said one shareholder at the meeting who declined to give his name. “Time is running out.”

Chen reiterated that BlackBerry wants to grow its software revenue by 30 percent in this fiscal year, which he estimated would be double overall market growth, and to notch positive free cash flow.

BlackBerry is due to report first quarter results on Thursday.

Chen took up the CEO role in 2013 with a reputation as a turnaround artist. But the company’s stock has only risen modestly since then, with many investors waiting for signs the now-smaller company will be able to carve out new opportunities.

“I appreciate the strategy,” said Ken Tota, an investor in BlackBerry’s biggest shareholder, Fairfax Financial Holdings Ltd. He said he was optimistic a renewed focus on security could help reinvigorate BlackBerry over the next five years.

“It’s a niche, but it’s a worldwide niche,” he said.

(With additional writing by Jeffrey Hodgson in Toronto; Editing by Bernadette Baum)