In an update to shareholders, Prem Watsa, CEO of Fairfax Financial Holdings Ltd (TSE:FFH)(OTCMKTS:FRFHF), highlighted their investment in BlackBerry Ltd (NASDAQ:BBRY). Particularly, Watsa recognized the efforts of BlackBerry CEO, John Chen, in righting the BlackBerry ship. Watsa said Fairfax, one of the largest shareholders in BlackBerry, has no intention of pushing for a takeover of the company. There were some rumors that Samsung Electronics had sought to purchase BlackBerry, primarily interested in the patent portfolio of the Ontario-Waterloo company.
First, Watsa noted that Chen was able to live up to his promise of entering a cashflow breakeven in fiscal year 2015, which ended in February. The efforts of Chen enabled BlackBerry Ltd (NASDAQ:BBRY) to make a cashflow breakeven by the third quarter, ahead of schedule. Chen has been at the helm of BlackBerry for a little more than a year, having inherited a company that was going downhill.
BlackBerry had lost $1 billion when Chen joined the company, but now cash in the company is more than $3 billion, according to Watsa. One of the strategies that Chen has used to raise funds for BlackBerry is the monetization of real estate assets.
Through the partnership with Foxconn Technology, BlackBerry has been able to introduce a number of smartphones, two of which Watsa described to Fairfax shareholders as “magnificent.” The two ‘magnificent’ products include BlackBerry Passport and Classic. Watsa own a Passport device.
Focus on Internet of Things
Although BlackBerry Ltd (NASDAQ:BBRY) maintains a footprint in the smartphone market, where it has lost ground to competitors Apple Inc. (NASDAQ:AAPL) and Samsung, Watsa said Chen believes the company’s future is in the Internet of Things. It is estimated that 50 billion devices will be connected to the Internet under the Internet of Things initiative by 2020.
BlackBerry is already making a foray on the Internet of Things system, with its QNX subsidiary, which is focused on the automobile segment, with dominance in car infotainment.
Achieving breakeven is just the start of things. Watsa told Fairfax shareholders that Chen is focused on improving revenue and returning BlackBerry Ltd (NASDAQ:BBRY) to profits. He further stated that Chen intends to return BlackBerry to profitability through organic growth and acquisitions, and there are enough reasons to believe that Chen will succeed in this endeavor.
Full Letter: Prem Watsa