BlackBerry CEO Chen Says Turnaround Odds Improve to 80-20

May 29, 2014 4:23 pm ET

(Updates with closing share price in fifth paragraph.)

May 29 (Bloomberg) -- BlackBerry Ltd. Chief Executive Officer John Chen said the chances of turning around the struggling smartphone maker have risen to 80-20.

Chen, who was named as BlackBerry’s top executive in November, had previously been placing the recovery odds at 50-50, no better than a coin flip.

“We have a lot of problems, but it’s not dead,” Chen said yesterday at Re/code’s Code Conference in Rancho Palos Verdes, California. “I am quite positive that we will be able to save the patient.”

Chen has been working to shift the Waterloo, Ontario-based company’s focus from smartphones to mobile data and security services. Since his arrival, BlackBerry has pushed to have a bigger role in connecting everything from heart monitors to automobiles to the Internet as mobile service spreads beyond phones and tablets.

BlackBerry shares rose 6.2 percent to $7.74 at the close in New York, the biggest one-day jump since Feb. 25. Today’s increase was enough to push BlackBerry’s stock to a gain so far this year. Through yesterday, the stock had been down 2 percent since Dec. 31.

In his first months, Chen has opened BlackBerry’s phone software to rival mobile management systems, partnered with health-care technology developers to connect doctors and medical devices and hired contract manufacturers to make some of its phones in an effort to broaden its options.

Smartphone Decline

BlackBerry introduced Z3, its lower-priced phone, in Indonesia earlier this month and later this year the company plans to start selling Classic, a combined touchscreen and physical keyboard phone that resembles some of its original Bold models. The company also has a new BlackBerry Enterprise Server 12 that it has said it will start selling in November.

Chen said in an April interview that he’s giving the company six to eight quarters to replace declining hardware sales with higher-margin software revenue.

BlackBerry’s share of the smartphone market is quickly vanishing. The company’s global shipments are projected to fall almost 50 percent this year to about 9.7 million smartphones, according to a new forecast yesterday from research firm IDC.

BlackBerry’s worldwide market share will slide to 0.8 percent in 2014 and may slip to 0.3 percent by 2018, IDC said. The company’s operating system accounted for 1.9 percent of the market in 2013. As recently as late 2010, its global market share was 19 percent.