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BlackBerry investors see no quick fix under Chen

Compared with what his predecessors had to go through, BlackBerry Ltd. chief executive John Chen has so far received relatively kind treatment from his company's long-suffering investors.

This week, he'll have a chance to reward their patience – or see how far he can stretch it.

BlackBerry is expected to report its fiscal fourth-quarter earnings before markets open on Friday. On average, analysts expect the company to post revenue of $1.1-billion and a net loss of about 57 cents a share for the quarter ending March 1, 2014.

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Those numbers would not be too far off BlackBerry's performance in the previous quarter, but well below the same quarter last year, when BlackBerry posted revenue of $2.7-billion and earnings per share of 18 cents.

There's growing evidence that investors have been willing to cut the company a little more slack these days, as it continues trying to pull off a difficult transition from a smartphone giant to a (possibly much smaller-sized) software and services provider.

After dipping to 10-year lows around the $6 mark in December (following a botched attempt to go private), BlackBerry shares have held somewhat stable at around the $9 mark since January.

The lack of share price shocks is especially good news for BlackBerry, given that one of the main justifications for trying to take the company private in the first place was to avoid the negative stock market repercussions of transition-related news, such as product cancellations and job cuts.

Indeed, the Street might be willing to even give the stock price a little boost, should earnings come in around expectations – and should Mr. Chen be able to give some insight into how the company's cost-saving measures are working thus far(since Mr. Chen took over as CEO in November, BlackBerry has continued frequent rounds of job-cutting, and has also sold considerable real estate holdings).

Investors and analysts will also be looking for more information about BlackBerry's production deal with manufacturing giant Foxconn, which recently began building lower-end BlackBerrys targeted at overseas markets such as Indonesia – where BlackBerry's market share hasn't plummeted in the same way it has in North America.

The overarching strategy behind the Foxconn deal, announced in late December, was to have a third-party manufacturer take over the building of cheaper commodity phones, thereby allowing BlackBerry to focus its in-house talent on the design and manufacture of a very small number of high-end, high-margin devices.

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But for that strategy to work, not only must overseas consumers in markets such as India and Venezuela continue their love affair with BlackBerry, but the company must also find a way to regain the interest of its high-end customers.

Many of those consumers (and some enterprise customers) left the BlackBerry platform behind late last year, when news of the company's impending (but ultimately unsuccessful) privatization shook their faith in the prospects for the smartphones.

Mr. Chen will also face pressure to elaborate on the wider shift from hardware to software. In recent months, much of the

company's news has related to new devices, but many research firms now estimate that BlackBerry devices make up a minuscule portion of the overall market share.

According to International Data Corp., BlackBerry's share of the global smartphone market at the end of last year was just 0.6 per cent, down from 3.2 per cent last year and now lagging well behind even the Windows Phone platform.

As such, perhaps the best news Mr. Chen can give investors is not the launch of a new device, but the signing of a major software or services deal – something that proves BlackBerry is on course to finally focus on the profitable part of its business.

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