BlackBerry is going to stop making its own smartphones

BlackBerry Ltd will outsource manufacturing of its once-core hardware, including its flagship smartphone, the Waterloo-Ont.-based company said on Wednesday as it reported another loss and sharp drop in revenue.

The company also said chief financial officer James Yersh would leave effective Oct. 1 for personal reasons. It announced former Sybase executive Steven Capelli as his successor.

Shares of Waterloo, Ontario-based BlackBerry moved higher following the news.

The net loss came to $372 million US, or 71 cents a share, on revenue of $334 million, as the company booked $147 million in charges from its reorganization. Second-quarter revenue fell 31.8 per cent from a year earlier.

A year ago, it reported a profit of $51 million, or 24 cents a share, on revenue of $490 million.

‘BlackBerry is no longer just about the smartphone, but the smart in the phone.’ 
– BlackBerry’s John Chen

Excluding one-time items, the company said it said broke even. On that basis, analysts had on average expected an adjusted loss of five cents a share on revenue of $393.75 million, according to Thomson Reuters.

But beyond the numbers, the real news was the company announcing plans to stop building its own hardware devices, and instead focus on making the software that goes into them.

“The company plans to end all internal hardware development and will outsource that function to partners,” BlackBerry said. 

That means the company plans to work with other technology manufacturers to build devices that are branded as BlackBerrys and come with all the company’s software and internal workings.

The company announced its first such partnership in a separate release Wednesday, working with one of Indonesia’s largest telecom companies on a joint venture to make smartphones for that market.

“BlackBerry is no longer just about the smartphone, but the smart in the phone,” chief executive John Chen added.

The company raised its adjusted earnings outlook for the year to a range of breakeven to a five-cent loss, compared with an earlier forecast of a 15 cent loss, after refinancing its debt and as margins improved.

The company’s shares rose 6.7 per cent to $8.35 in premarket trading.

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