Blackberry Actually Has A Recovery Plan

Image via Flickr/ Kārlis Dambrāns

Blackberry Ltd. (NASDAQ:BBRY) revealed its earnings numbers for the three months ended November three this morning before the market opened. The company showed a massive loss as it wrote down some of the value of its business as it continues to struggle in the mobile market. Blackberry lost $4.4 in the third quarter. That amounts to $8.37 per share. In pre-market trading, the company’s shares were up, demonstrating a belief that the company may be in for recovery.

The turnaround certainly doesn’t stem from the $8.37 per share loss the company recorded this morning, but it may come from another announcement the Blackberry made this morning. The company said that it was moving much of its hardware manufacturing to a third party electronics manufacturer. Foxconn, which was made famous for its manufacturing contract with Apple Inc. (NASDAQ:AAPL) will make a smart phone for Blackberry next year.

Blackberry Recovery Plan

This morning’s announcement shows that Blackberry Ltd. (NASDAQ:BBRY) has a plan for recovery that doesn’t involve selling itself to a bigger player. The Canadian smart phone maker tried to sell itself through the third quarter, but failed to secure  a buyer at an acceptable price. The company’s board decided against any deal that would split the company apart. That left the firm’s shareholders worried if any kind of recovery plan would emerge.

Blackberry has released some kind of plan. It will no longer concentrate on hardware. The firm has decided that it’s a software company at heart. Foxconn is able to build smart phones of an incredibly high quality, so there will be few worries about a change in pedigree. There is still a worry about the demand driving Blackberry business, however.

The company’s interim CEO John Chen said “With the operational and organizational changes we have announced, BlackBerry has established a clear roadmap that will allow it to target a return to improved financial performance in the coming year.” That news comes as some comfort to investors, but it is unlikely to drag the company’s shares back to the highs of early 2013, when the release of BB10 was still something to hope for.

Blackberry Turnaround On The Way?

Blackberry ltd. (NASDAQ:BBRY) fell in a field dominated by Android smart phones. The company did not keep up with the touch screen sensibilities of the iPhone and its competitors and it lost business to those smart phones at the high end and the low end. Android smart phones came to dominate the low end and have been methodically driving Blackberry Ltd. (NASDAQ:BBRY) out of its remaining bastions in the developing world.

Blackberry didn’t die back because the company makes its own phones, it dies back because nobody wanted to buy them. This morning’s news will not save the company, but a focus on software is what many were looking for. Blackberry looks a little stronger this morning, but it looked god-awful yesterday. The company’s turnaround will need more than this to bring success.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.