BlackBerry Ltd.: CEO Chen Now Has More Modest Goals

BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) CEO John Chen just lowered his target for smartphone sales.

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BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) CEO John Chen is not shy about setting ambitious goals for the company. He wants to see US$500 million in annual revenue from software and licensing. He wants to see US$100 million in annual revenue from BBM. And he has also said he wants to sell 10 million smartphones per year.

That last goal is particularly ambitious, especially given the company’s recent difficulties in selling handsets. So, on Thursday, during an interview with The Verge, Mr. Chen lowered the goal to five million.

Open to exiting the handset business

As BlackBerry shifts its focus from handsets to software, many investors think the company should stop selling smartphones altogether. It’s a compelling case to make. After all, if BlackBerry quit selling smartphones, it would instantly transform from a struggling handset maker to a growing software provider. And it would allow the company to focus on what it does best.

Now it looks like Mr. Chen is more open to the idea as well. After stating his five million goal, he said that this goal must be reached for the handset business to be profitable. And if he can’t reach that goal, Mr. Chen hinted he would exit the business altogether.

The Priv is its last chance

Of course, this all depends on the Priv, BlackBerry’s latest device. As we all know by now, the Priv runs on the Android operating system, and features a slide-out keyboard. It certainly has a decent chance of selling well, although we’ll have to wait for two more quarterly reports to find out.

If the Priv is successful, BlackBerry will likely migrate over to Android. It won’t happen right away, because the company’s most important customers still value the strong security of BlackBerry 10. But over time this would certainly be the best option.

If the Priv is unsuccessful, then BlackBerry will never be able to sell five million handsets per year. And that would mean a full-scale exit from the handset business.

Either way, if you’re counting on another BlackBerry 10 device being released, don’t hold your breath. BlackBerry’s big enterprise customers, including the U.S. government, can get by on the BlackBerry 10 devices already in circulation, so there’s no need to come up with anything new.

As an investor, this is something I’d rather avoid. There is too much uncertainty surrounding this company right now, and maybe there will be a better opportunity once its path is a little clearer.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Benjamin Sinclair has no position in any stocks mentioned.

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