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BlackBerry shifts manufacturing to Foxconn, reports huge loss

by David Needle

December 20 2013

Struggling smartphone maker BlackBerry announced a five-year deal with Apple's manufacturing partner Foxconn to manufacture its devices.

While saving money, the move should also let new CEO John Chen refocus the company on services and software, particularly for enterprise clients. 

BlackBerry, which exited the tablet business last year, has struggled to recapture its smartphone mojo, even with corporate clients who value its security features.

In addition to the Foxconn deal, BlackBerry also said it will take a charge of $4.6 billion, in part because of poor sales of its highly touted BB10 smartphones.

Despite the huge losses, analyst Jack Gold of J.Gold Associates does see some silver linings in BlackBerry's news. 

"On the positive side, the number of BES10 trials/installations increased to 30,000 organizations," said Gold. He notes that while BlackBerry isn't realizing much revenue yet from these BlackBerry Enterprise Server installations because many are free trials "the fact so many organizations are at least willing to try BES10 indicates that BlackBerry has a good possibility of converting many of them to paying customers.

Gold also thinks the partnership with Foxconn should help BlackBerry both financially by lowering costs and with new designs for the emerging markets where they still have a major presence.

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