Needham & Co. issued a research report on BlackBerry Ltd (BBRY - Get Report) (BB) today, suggesting the company appeared to be making the right moves, but that it was too soon to call the turnaround efforts a success. According to Needham & Co. analyst Charlie Wolf, who summarized the company’s recent conference call in the report, it will probably be two years before we can really judge the success or failure of BlackBerry.
Foxconn deal a key factor in BlackBerry’s efforts
Wolf emphasized that the recently signed deal with Foxconn Technology Co., Ltd. (2354) OTCMKTS:FXCOF was hands-down the biggest deal in BlackBerry Ltd (BBRY - Get Report) (BB)’s turnaround efforts, and that the future of the company likely hinges on how the Foxconn partnership develops. The deal involves jointly designing and developing an inexpensive smartphone tentatively named Jakarta. The new phone is expected to be introduced in Indonesia in 2Q 2014.
“While BlackBerry's enterprise businesses might achieve some success – it’s too early to know – we believe the key to any turnaround will be its partnership with Foxconn,” Wolfe said in the report. “The company needs to increase its device revenues to offset the fixed expenses in its operations. The company hopes to return to profitability by fiscal 2016. But it will require a successful partnership with Foxconn to achieve it.”