Resurgent BlackBerry hiring 350 engineers

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SHAFAQNA –  BlackBerry will hire 350 engineers in the coming months as the smartphone maker focuses on growth after years of layoffs, cutbacks and restructuring. BlackBerry chief executive John Chen talked about the workforce expansion Friday after the Waterloo-based company reported better-than-expected second-quarter financial results. The company, which turned in a smaller loss than analysts expected, is on track to become cash-flow neutral by the end of the current fiscal year and return to profitability in fiscal 2016, Chen said. It will focus on growth in key areas, he said, and hire hundreds of engineers in the coming months as business improves. Many, but not all, of the new hires will be based in Waterloo. “We have already reached out to the University of Waterloo,” Chen said in an interview at BlackBerry headquarters. “We are going to try to step up to get more co-ops and new grads.”

For the first time since cutbacks started in 2012, BlackBerry disclosed the number of employees it has in Waterloo Region. The total is about 2,700, or about 25 per cent of its peak local employment of 10,000 to 11,000 in 2011.

Worldwide, the company now employs 7,000 people, down from the 2011 peak of 17,000.

Several times this week, including at the launch of the new Passport smartphone on Wednesday, Chen stressed that the company’s restructuring is done, and it is hiring in key areas as it shifts its focus to growth.

“It (the employment total) will go up as we start seeing the business,” Chen said. “So we have a lot of openings right now.”

In a conference call with analysts earlier in the day, he said the company is “hiring selectively in a lot of places — enterprise sales, software people.”

BlackBerry reported a loss of $207 million US, or 39 cents a share, in the second quarter ended Aug. 30. It lost $965 million US, or a $1.84 a share, in the same period a year earlier.

However, the company’s adjusted loss amounted to two cents per share when factoring in a restructuring charge and an adjustment related to its debentures. Analysts on average had expected a loss of 16 cents, according to a survey by Thomson Reuters.

Sales in the second quarter dropped to $916 million, coming in short of analyst estimates of $950 million and below the $1.57 billion reported a year ago.

Much of the decline in sales came from lower services revenue for offerings like access to its secure enterprise servers.

During the quarter, the high-margin services revenue fell 18 per cent to $424 million from the previous quarter, and a more dramatic 42 per cent from the same time a year ago.

It’s figures like these that show BlackBerry still has a lot of work to reclaim a stronghold on the business users that once loyally carried its devices.

Over the past year, BlackBerry has been squeezed from all angles by Chen, who stepped into the role with the goal of creating a leaner and profitable operation.

“When I came into this job everybody (said) if you don’t repair the balance sheets this company’s dead,” Chen said.

“I hope everybody realizes we are well on our way to shoring up our balance sheets.”

But the company is still in the first half of a two-year recovery period, and revenue may still have further to fall before it hits bottom, he said.

Chen has stuck to a goal of making the company break even on cash flow by February 2015, which is the end of the company’s fiscal year.

Morningstar analyst Brian Colello remained cautious about the long-term demand for BlackBerry’s products while complimenting the improvements the company has made through cost cutting.

“The much harder task, in our view, will be revitalizing demand for the company’s handsets and converting software licensees to longtime paying customers,” Colello said in a note.

In the meantime, Chen is making fundamental changes to how the company does business.

Already he has introduced the EZ Pass Program, which allows corporate users to hook its employees up to the same device management system, regardless of whether they’re using a BlackBerry, iPhone or Android device.

The technology has been free since it was introduced earlier this year, but Chen intends to start charging users a subscription-based fee to remain on the system.

“I suspect when we’re all said and done there will easily be 10 million subscriber licences,” he said.

BlackBerry is also pushing a more secure version of its BlackBerry Messenger service to corporate customers that will incorporate additional features like money transfer and a virtual conference service called BBM Meetings for an extra cost.

Monetizing BBM has been a goal of BlackBerry for over a year, though it hasn’t disclosed any sales figures yet.

Active users on the platform grew to 91 million in the quarter from 85 million, while Chen says he wants to eventually make the service generate $100 million of revenue in 2015.

The company said Friday that more than 200,000 of its new Passport model have been ordered since it was released on Wednesday.

Chen said that’s given him enough confidence to move ahead with another iteration of the device that will hit the market sometime in the future.

BlackBerry is also working to phase out its popular Bold model that helped sustain sales during its most troubled days, while it will introduce the BlackBerry Classic later this year.

Another new device will be unveiled at the Mobile World Congress meeting in Barcelona in March.

Chen said the company hasn’t given up on the consumer market. But for now, business customers remain the priority.

“One thing at a time,” he said. “I need to (recapture the base) of enterprise customers for this company to get back on track financially. I am by no means suggesting this is the only thing we’re going to do.”

BlackBerry noted that one of its key selling points — the security of its devices and network — will get even stronger with the recent acquisition of the German company Secusmart, which will provide secure voice and text communications.

“To put that in a little bit of context, BlackBerry has always been known as the leader in secure data with all the encryption technology, and of course we have BBM, which is highly secure,” Chen said. “So we have data and messaging covered. With this acquisition we also cover voice and text.”

Shares of the company gained five per cent, or 56 cents per share, to close at $11.44 on the Toronto Stock Exchange on Friday.

With files from The Canadian Press

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