BlackBerry CEO John Chen talks Foxconn, BES and security on CNBC

By Adam Zeis on 20 Dec 2013 12:47 pm EST

After Kevin finished up his chat with CNBC earlier today, BlackBerry CEO John Chen was on air to talk a bit more on all of the news from today as well. He started out on the new partnership with Foxconn, stating "I think this is the right partner to do business with together." Chen noted that handset volumes are dropping and fixed costs are too high, so with Foxconn, they are able to get rid of inventory costs -- noting that Foxconn is a "big part of the equation."

Chen went on to say that BES becomes more important now as well as letting customers know that BlackBerry now has a clear direction and financial stability. He affirms that they still have the most secure end-to-end product on the market.

Check out the video below for the full interview and drop your thoughts in the comment.

Topics: BBRY John Chen Apps

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Reader comments

BlackBerry CEO John Chen talks Foxconn, BES and security on CNBC


A 4.4 billion dollar loss and the CEO outsources the hardware and you guys are happy?

Stick a fork in it and call the fat lady in

I thought the actual loss is 400 million.... if it was 4.4 billion in actual cash lost they would be BANKRUPT...


You're right. Some people like to sensationalize the headlines. If you look at his profile, he doesn't own a BlackBerry device. He has nothing better to do with his time than to come on CB and poo poo.

Yeah I am totally confused about this financial report...

My friend BBM me this morning saying BlackBerry burned $4.4 bil this quarter and then I heard the same thing being reported on 680 News...

How does $1.2 bil in revenue equates to a loss of $4.4 bil? Are they comparing the earnings to last year's profits?

Posted via CB10

That's their accounting loss. True loss is only 354 million.
their Cash on hand also increased from 2.6B to 3.2B

while they did not burn 4.4 billion, they still lost it over last years numbers. It is money that they will never see, and would have gained had they done absolutely NOTHING for an entire year.

Well, except that they also expect to reap potentially huge tax refunds from posting such losses, further adding to their cash position, I imagine--so it's 'book' losses they're going to turn into some real money, in a way. If they had done nothing, they couldn't have incurred the losses, and these are largely inventory-related again. The deal with Foxconn should eliminate or greatly ameliorate such losses in the future.

Your right, but selling the entire hardware end will completely get rid of the potential for loss. They need a long term licensing agreement to ensure that the hardware will be made, and then focus on selling software as a service.

They have proven for 2 years now that they cannot do hardware anymore and that is not going to change soon.

If they do not focus solely on software, they will lose the one foothold they have and that is enterprise/government.

... And you guys do know that this is a first step to selling the hardware off right?

Your right I do not have a BB but have several interests in the mobile space. It is a shame to see BB go down the tunes, but they are continually blowing opportunities so I am not surprised.

They need to go back to basics and become a software as a service company until they are strong enough to head back into the hardware space.

The whole point of this is to NOT give up on hardware...


Some of these naysayers on here...gotta ignore them because if they had it right based on their predictions, the hardware side would be already sold and BlackBerry would be broken up.

-STV on Z10STL100-3/ TMO US

Yeah that is kinda right.

They took a 2.7BN loss on the hardware side and realized that they couldnt do it, so they outsourced it. Now they have almost zero control over what they put the software on (the foxconn deal states that they will design build and sell the hardware) unless they build it themselves, and they are incapable of that.

The bump in stock is only due to the foxconn deal being announced at the same time. If they were 2 stand alone announcements, even within a day or so of each other, they stock would be tanking, which by the end of the week it will be anyway.

Software as a service, that is all that is left

I think it's great to outsource. Blackberry will still own the intellectual property, and we won't have to see the huge inventory write downs anymore.

Also, Foxconn I'm sure will have some power in helping to move the inventory thru their channels.

It's Foxconn chance to take a bigger margin on the hardware side, as I'm sure apple isn't sharing too much.

Posted via CB10

they will own the software, that is it. the deal with Foxconn is to design, make and sell the BB devices. BB will have no horse in the race at all and see no real gains from hardware on the bottom line.

"It was ugly," said Colin Gillis, an analyst at BGC Partners.

Gillis initially said allowing BlackBerry devices to be made by Foxconn's operations in China could pose a problem for a company that relies on governments for a lot of its business because BlackBerry has long emphasized security. But Gillis later noted the devices will be made in Indonesia and Mexico and that BlackBerry will continue to make high end phones so that alleviates concerns.

Posted via CB10

Read thru it again No nexus. It clearly states that BlackBerry will still own the intellectual property, meaning the design of patented property can only be used for benefit of BlackBerry . If you aren't totally aware, the Z10 uses the same antenna, camera, and processor as the Samsung Galaxy. We don't have an exclusive component phone today, they are all sharing components . Also, BlackBerry still can make phones. This is a partnership! Not a sale. For example, they currently are designing new phones here in Waterloo as I type.

Posted via CB10

Sounds to me like Foxconn will help design and hold inventory for consumer handsets which takes cash risks off the table for BlackBerry. These handsets presumably will not have all the layers of security built from the chip level up that the high end phones required by security conscious customers and that BlackBerry will still design and have built will have. Sounds like they have managed to split out the hardware needs of consumers from the hardware needs of Gov/Enterprise. You don't need all that built in if you are never going to hook that phone up to BES service.

Posted via CB10

sure they will own the design patents, but they will not be making any money off of them.

It needs to be a sale, that is really all I am saying. They have to keep people wanting blackberry software, not taking unsustainable losses with the hardware end that drags everything down.

When you Own design PATENTS and another company makes a phone using your design patents they pay the owner royalties...

Posted via CB10

You've read the BBerry/Foxconn deal?

lol...of course you haven't. You don't know the ins and outs of this deal.

Reading? How does it work?

I said, "And you guys do know that this is a first step to selling the hardware off right?"

Not that it was selling it now

Thanks for your opinion, now hurry on to I more and go post something negative about how android is swiping the streets with them in sales, don't just rain here negative Nancy, have A nice day.

BlackBerry forever, haters never!

The handset business will only a be value add to the enterprise services offerings. This is where they need to focus. Its all about software and services. For me if I buy their enterprise and security services I would like to have some BlackBerry handsets thrown in as part of the service plan. The latter is not where blackberry should be making their money. Great move to dump it. I look forward to seeing how the software and services strategy plays out in 2014. I wouldn't be calling for the fat lady just yet.

Why do the expense of building hardware? Contracting it out seems to work well for a lot of other OEMs...

They always outsourced hardware because they could not meet the market request just with their Waterloo plant, and in the last year or so hardware was completely outsourced to Mexico.

Posted via CB10

Well if anything, no one can say that he isn't trying something entirely new. So... I don't know... at least there's hope for a different outcome?

Posted via CB10

I don't think BB will live or die based on a high end device. Keeping the big corporations and governments engaged with the Enterprise Solution is what will do it.

Chen is making moves- what can we expect from the other executive appointments? Interesting.

Posted via CB10

I still feel confident with the company, it's time to refocus, and he has stated on the emerging markets in the far east, and also security, which Blackberry is miles ahead , what makes me mad is the previous management who has let this great product to be were it is,
It will be a very slow road back, but I sticking with Blackberry

Well we shall see what happens in the handset business overall. Sales will slow and margins will slim. This way BlackBerry can still have handsets but are not dealing with holding inventory. Next big step would be licensing agreement which, again takes more risk off the table with BB. Build up enterprise, stabilize and then grow cash flow, monetize BBM and see where things go. If you don't like it Mr. Nexus, that is your opinion. I don't share it and see the moves today as very positive!

Posted via CB10

The level of ignorance is too damn high. The accounting aspect has been covered above, however, outsourcing hardware cuts cost, as Chen said. This is not "getting ready to stop handsets" this is making sure they have enough money to stay alive by cutting costs.

I'm not sure going with Foxconn was the best choice however. I personally have always avoided apple products because of their relationship with Foxconn and the human rights violations that result from it.
While profit is essential I hope BlackBerry doesn't become a supporter of the 100 hour work week.

Posted via CB10

If you are a concerned global citizen also take a look at the other consumer products you use on a daily basis. Do you use any Nestle products by any chance? There are some you just can't avoid. You are on the internet using a device that was most likely had some part of it built by a company that had violated human rights.

Agree, but your smartphone is still a good start... then your TV, your PC, your whatever device, your nutrition...

BP, Gazprom, RoyalDutchShell et al
The most global banks...
Lockheed Martin
You name it

This post could go on... and on... and on... but we have to start with changing something... and also go on... and on... and on... changing..

Posted via CB10

If you're concerned about human rights violations, you cannot buy any PC today. E.g. on 99% of the mainboards have components build by Foxconn on them, like PCI-Express or RAM slots.
Apple isn't the only one using Foxconn to produce goods on low cost - it's the whole industry.

Dagnabbit - I can't see this video either! It just isn't there. Is this a CB10 app bug? I see and play videos just fine via the browser, but I used to be able to play them right in the app.

Posted via my Q10, still on

If this means they are giving up hardware, does that mean apple have given up hardware? Don't they work with the same folks?

Posted via CB10

I'm a little worried about a Chinese Company building the phones and still maintaining the high level of security.

Sure the software could be loaded elsewhere, but controlling the entire production line was a plus.

I suppose it's time to cross the hall and ask the Intelligence Branch and IT guys if this affects the " Five Eyes" governments.

Posted via CB10

Technically speaking Foxconn is not a Chinese company, so I don't think that will be an issue. Especially in the news they say the phone will be manufactured outside of Mainland China.

In addition to what peter said, it appears the Foxconn deal is specific to the phone models they will be promoting in the emerging markets. For now it appears higher end phones will still be manufactured by BlackBerry end to end.

Posted while peeking and flowing on my incredible BBQ10!

Most companies today outsource their hardware. BlackBerry was one of the few that didn't and this is a bad thing? I don't think so

Posted via CB10

Apparently, Chen knows what he is doing... Foxconn allows BlackBerry to minimize "fixed costs" and limit these outrageous "write downs" on inventory...

The "GREAT NEWS' is that he is going to keep the "BlackBerry Design Team" working on High End phones.... as long as I can keeping getting those - I could care less about a lot of other things BlackBerry.

I have been saying for years that BlackBerry is "never going to out metrosexual must have app Apple and Android".... great to see that Chen understands "who BlackBerry is"....

Finally a Leader Who Does....

Berry Christmas...

From CB on the Z30

I think the Foxxcon move is 3 years too late but a great move on the part of Chen. I think the new direction we see embracing Android on the BB10 platform will pay dividends be it Enterprise or Prosumer. He is not sugar coating things and I have to respect his vision till we see different.

The market is responding and that has to be a good sign.

Foxconn I guess is the largest in the world at what they do,so because their costs are so low they would be the ones to produce the next innovated Bomb Shell,which I am sure BB will come out with.Good move to associate with them.

Foxconn? Seriously partnering with those slave drivers in China... one of the reasons I avoided the iPhone was because of Foxconn and the working conditions those kids have to put up with.... Foxconn already has a bad image, why would BlackBerry want to be associated with the slave drivers who manufacturer the iPhone , face palm, so much for ethics and being Canadian

Posted via CB10

Foxconn makes phone for Apple, don't they? Ain't people buying iPhones in the millions? BlackBerry must survive. Those who don't like it should go and buy other phones.

You haven't really traveled much, right? They just got caught. Slave driving of various degrees happens everywhere in these developing countries. This pales in comparison to Africa for this sort of thing.

Once again not sure what all the negative attitude around here is about.

In 45 days he has come in and secured a deal to fix one of BlackBerry main problems and essentially keep BlackBerry moving through this difficult time. I don't know much about John Chen other than he has turned around other companies, this is seen by his action to moved forward at a quick pace and get things done (not like the BlackBerry of old)

At the end of the day the fact they will be making low end devices in markets where they are strong with next to no risk is a huge benefit.

Now it is not all positive but imo the fact they sold any phones with the for sale sign up is good enough for me for now... it's been awhile since I could say this but I look forward to the next call to see how things are moving forward

Posted via CB10

John Chen is simply talking the talk and walking the walk. Like I have said before, this the beginning of a new era. :)

Can someone explain to me how they went from 1 billion loss (last quarter) to 4.4 billion loss this quarter. It doesnt make sense. How? Is it out of context.

Foxconn is the reason why I do not buy Apple products. I can't support a company that solves issues with suicide nets. I know Blackberry is hurting but this partnership will destroy Blackberry's image. Time for Chen to go bye-bye!

Posted via CB10

Call it a conspiracy speculation, but trying to get devices built in an 'Apple Factory' seems to be leaving the henhouse door open to the Fox... Cons.

Hope we don't see a major problem with any upcoming new BlackBerry devices.

What if the deal goes South? Has BlackBerry burned any bridges with ex-builders? I would like more data on this before deciding that it is a great idea; but then again, time will tell.

I doubt very much if more than 10% of Apple or Android users know, or care, where their devices are manufactured. If they did, they would shun offshore products in favour of something built in North America. Most live with the illusion that Apple is an American company, ergo, it's good old US business and technology but probably (and I speculate here) no more than 10% of the value of the product is made in North America. As I understand it Apple even hides their profits in low tax off-shore havens,

thereby further reducing any net benefit to the US economy.

[personal rant]
The ultimate end-game of this off-shore manufacturing trend will be to minimize wages in North America to the point where we won't even be able to worry about smartphones because we won't be able to afford them anyway.

Posted via CB10

WreckingBall60, The reason Apple (as well as many other U.S. companies) keep their profits offshore is that if they repatriated their earnings back to U.S. shores, they will get HOSED BIGTIME on taxes at a rate in excess of 35% and I can't think of anyone with half a brain that would submit to such extortionary rates! The fact that your "source" is reveals a great deal about how you view the profit motive in the first place! When the government jacks up tax rates on companies, it is a tax on the production of goods and services and that cost is then passed onto the consumer in the form of HIGHER prices for their goods and services. Is that really something you want to see happen! If your a consumer of these items (in this case smartphones) I would venture to say that the last thing a majority of consumers want to do is pay anything more then they are already paying for goods and services. And if you are a business owner, you already know this to be the case!

PS Bacon Muncher I intended this post in reply to Herbie above, didn't notice I'd hit the wrong selector until after the post. ;-)

Posted via CB10

BlackBerry should stay strictly business enterprise. Forget trying to be a fun phone for the common people.

Posted via CB10