BlackBerry to customers, partners: Don't freak out (or bail on us) yet

The smartphone maker publishes an open letter in efforts to appease customers and partners, as the company faces financially troubled times. We analyze what the company is saying.
Written by Zack Whittaker, Contributor on
Image: CNET

We may be sinking, but we're not underwater yet.

That's the sentiment coming out of the Waterloo, Ontario-based smartphone maker, which issued an open letter to customers and partners on Monday.

BlackBerry said it's "here to stay" in a 650-word note, published to 30 news outlets across nine countries.

In the letter, it said those involved in the company's ecosystem can "continue to count on BlackBerry." Earlier this month, BlackBerry reported an abysmal fiscal second quarter results, in which the company lost close to $1 billion on the back of poor BlackBerry Z10 sales.

"These are no doubt challenging times for us and we don't underestimate the situation or ignore the challenges," the letter said. But, the smartphone maker wanted to "set the record straight" about its future, despite ailing mobile market share and ongoing discussions of a buy-out and a sell-off to a financial consortium.

Some key points from the letter:

  • "We have substantial cash on hand and a balance sheet that is debt free." BlackBerry has about $2.6 billion in cash, down from $3.1 billion on the fiscal first quarter. That's a loss of $500 million in the space of three months. While it's true BlackBerry has no long-term debt, the company is eating away at its cash reserve, and fast. It hasn't eaten away that much cash in the past three years it was on the slide.
  • "We are restructuring with a goal to cut our expenses by 50 percent in order to run a very efficient, customer-oriented organization." BlackBerry recently cut 4,500 staff as it aims to refocus on the "enterprise and prosumer market," which the company still holds a niche segment of. The company already shed thousands of jobs, and doesn't have much left to cut in terms of human capital. Other than patents and intellectual property, and its enterprise network, BlackBerry doesn't have much else it can sell on to regain much-needed cash.
  • "Governments all over the world, global corporations and businesses that simply cannot compromise on security choose and trust BlackBerry." However, many Western governments are heading towards rival handsets, iPhones in particular, following the certification from the U.K. government, as well as the U.S. government and U.S. military. Many major U.S. government agencies have dropped their contracts with BlackBerry — while some reneged and said they are staying put. BlackBerry has a point, though. It's the first and only phone maker to secure crucial U.S. Defense Department "authority to operate" status.
  • "We changed with the market, embracing BYOD because we understand that as iOS and Android devices become common in the workplace..." And BlackBerry has seen an uptick in business users running its BlackBerry Enterprise Service 10 users, from 19,000 to more than 25,000 in the space of the past quarter. It's not definitive to say, but this appears to be indicative of existing BlackBerry customers supporting more iOS and Android devices in their enterprise. Exactly where BlackBerry handsets fit into this, however, the company doesn't state.
  • "There are already around six million customers pre-registered to be notified of our roll out [of BlackBerry Messenger]." Pre-registered figures represents only a small proportion of the wider picture, for sure. In 2011, BlackBerry had 50 million instant messenger users, which went up to 55 million in 2012 and 60 million this year. BlackBerry hasn't disclosed how many users it currently has, though, but the figure is expected to be significantly less.

You can read the full letter, as it will appear in global newspapers and publications around the world on Tuesday, below.

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