BlackBerry won't exit smartphone business, John Chen says

​BlackBerry CEO John Chen is reaffirming his intention of hanging onto the struggling smartphone, even as it becomes a lower priority in the company's turnaround plan.

"I don't want to give up the hardware business," Chen told shareholders Tuesday at BlackBerry's annual meeting in Waterloo, Ont.

"I think there's a shot at still making money in it."

Defends business plan

Chen took the defensive stance against recent calls from some analysts to stop making phones like the BlackBerry Passport and Classic, neither of which has ignited huge sales since they debuted last year.

When the details of BlackBerry's first-quarter results were released Tuesday morning, the dwindling popularity in phones remained a sore point.

The company, which only recognizes revenue on devices when they're sold to customers, booked revenue on 1.1 million BlackBerry smartphones during the period, a steep drop from the 2.6 million phones sold in the same period a year earlier.

Smartphone revenue fell to about $263 million from $379 million a year ago.

Device sales stalling

Chen acknowledged that device sales have been "a problematic area" in recent years, but he said more phones would launch late this year at it also rolls out a broader business plan to sell more software services.

"It's a very important entry point to security," he said.

"We have a lot of know-how and patents to at least have that dream."

But signs from analysts suggest BlackBerry needs to pull its head out of the clouds.

After reporting another loss in the first quarter, the company's stock dropped about four per cent to $10.88.

BlackBerry posted an adjusted loss of US$28 million or five cents per share, worse than analyst expectations of a three-cent per share loss, according to a survey by Thomson Reuters.

Revenues of $658 million were also softer than the $679 million analysts anticipated. Total revenue was down from US$966 million a year earlier, but about steady with the previous quarter ending Feb. 28.

Chen has been focused on transitioning the company away from falling handset revenues and towards sales in its software business.

Growth of software revenues to $137 million — about one-fifth of the total in the quarter ending May 30 — appeared to overshadow some of the problems with BlackBerry's hardware business.

In a separate announcement, BlackBerry said it will receive an unspecified licence fee from network equipment manufacturer Cisco for patents as part of a long-term agreement. The company did not offer any further details.