Blackberry Ltd inks deal with Foxconn to build low-end phones

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BlackBerry signed a partnership with Taiwan's Foxconn to build low-end devices for sale in emerging markets. (Reuters) BlackBerry signed a partnership with Taiwan's Foxconn to build low-end devices for sale in emerging markets. (Reuters)
SummaryBlackBerry said it hoped to expand the relationship with FoxConn to its top-of-the-line smartphones.

more profitable business model," said Chen, who is credited with turning around Sybase, a database and mobile software company, before it was sold to German software company SAP AG in 2010.

Chen has said he is counting on strong growth in BlackBerry's service business, which manages smartphone traffic on the internal networks of corporate and government clients.

"Just jettisoning all the stuff and driving on with the part of the business that makes money makes a heck of a lot of sense to me and that is very clearly where Chen is going," said Ross Healy, a portfolio manager at Macnicol & Associates who owns a small number of BlackBerry shares.

Carolina Milanesi, an analyst at Kantar Comtech, said the deal is a good move for Foxconn, the world's largest electronic parts manufacturer and a major partner of Apple Inc.

"This might be the first step for them to try and diversify, and experiment with putting their brand on the products they make," she said.

DEVICES ARE A CHALLENGE

In his first presentation to analysts after the release of BlackBerry's results, Chen struck an upbeat tone tempered with a heavy dose of realism. The mix may have helped soothe nervous investors who had sharply lowered their expectations for BlackBerry after a string of disappointing news.

"It's clear that he's not the old guard, he's not there trying to do what Lazaridis and Thorsten were up to. He's actually been taking some concrete steps," said Mark McKechnie, an analyst at Evercore Partners, referring to BlackBerry's founder Mike Lazaridis and Thorsten Heins, Chen's predecessor.

Chen moved quickly to stamp his authority on BlackBerry, hiring several former colleagues from his time at Sybase and SAP for senior roles in corporate strategy, marketing, and enterprise strategy, a key unit in the stripped-back company.

BlackBerry sold about 4.3 million handsets in the third quarter, with older BlackBerry 7 models accounting for about 3.2 million of that number.

The company recognized hardware revenue on 1.9 million devices, down from 3.7 million in the previous quarter.

On a brighter note, its cash pile grew to $3.2 billion from $2.6 billion a quarter earlier, but that included $1 billion raised by issuing convertible notes to a group of investors last month after calling off a months-long search for a buyer.

Service revenue slipped 13 percent as fewer people paid to use BlackBerry's secure network, and the company said that level of decline could be expected to continue.

Along with the writedown

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