In a letter to shareholders published earlier this month, Chairman and Chief Executive Officer of Fairfax Financial Prem Watsa shared some of the achievements made throughout 2016. While the subject of BlackBerry was but one paragraph in the 24-page letter, it's an excellent perspective on BlackBerry CEO John Chen's turnaround progress from the eyes of one of the company's biggest investors.

Watsa discusses how during 2016 Chen supplanted the manufacturing of hardware with licensing arrangements that will reap a recurring royalty for every device sold with the BlackBerry software and name. He also mentions the company's rise to breakeven on a cash flow and earnings basis as a major highlight. Along with this, Watsa notes continued efforts with QNX's embedded architecture and movements of BlackBerry Radar to address the broader IoT market with BlackBerry secure asset tracking.

Check out the excerpt from the letter below:


John Chen recently completed three years since he took over as CEO of BlackBerry in November 2013. Since that time, John has brought the company to breakeven on a cash flow and earnings basis. His confidence is reflected in the fact that he retired $645 million of the $1.25 billion of outstanding 6% convertible debentures and replaced the rest with 3.75% convertible debentures, non-callable for four years. We rolled our $500 million of 6% debentures after collecting a 4% early redemption fee. During the year, John got out of the manufacturing of smartphone devices and replaced it with licensing arrangements beginning in Indonesia, then China (TCL Communications) and then India (Optimus Infrastructure).

These arrangements result in BlackBerry receiving a royalty payment for each phone sold for its BlackBerry software and name. BlackBerry continues to be the gold standard for security for mobile devices. John continues to work on leveraging this capability while expanding BlackBerry's enterprise business, the Internet of Things (BlackBerry Radar) and QNX. Recently 451 Research came out with a report on BlackBerry – ''BlackBerry is Back''. Worth reading. We continue to bet on John!

2016 was certainly a quiet year for BlackBerry with lots of work being done to finalize the transition to a software-centric entity. 2017 will be all about growth. With only three days until the Q4 fiscal 2017 results Watsa seems as confident as ever in John Chen's ability to grow BlackBerry into the future and solidify its place in the growing global market.

Source: Fairfax Chairman's Letters to Shareholders