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BlackBerry manufacturer begins talks to wind down partnership

Jabil Circuit Inc. told analysts that the company is reconsidering how much BlackBerry will contribute to its financial results next year.


TORONTO – A BlackBerry smartphone supplier is moving ahead with plans to end its partnership agreement, raising new questions about whether the Canadian company will soon exit the handset business.

The chief executive of Jabil Circuit Inc.told analysts in a conference call that Jabil is reconsidering how much BlackBerry will contribute to its financial results next year.

“We are in discussions right now on how we are going to wind down the relationship,” CEO Mark Mondello said late Wednesday, breaking with Jabil’s usual practice of declining comment on specific customers. “BlackBerry has been a great partner over the past six to seven years and we believe that they will offer their typical high integrity co-operation as we navigate this probable disengagement in the coming months,” he added.

Jabil is factoring in a combination of income loss and the financial hit that would be felt on the company’s infrastructure, Mondello said.

The manufacturer said the time for any decision was still uncertain, but that it was likely to happen “in the coming months.”

The comments add to growing anticipation that BlackBerry could stop making physical devices after its latest offerings failed to catch fire with consumers.

Earlier this week, the Waterloo, Ont.,-based smartphone maker became the centre of a highly conditional takeover offer from Fairfax Financial, one of the company’s largest shareholders.

The handset business has been under the microscope of analysts since before the launch of BlackBerry’s new smartphones earlier this year, with several suggesting that the company shut it down to reduce losses and focus on profitable parts of its business tied to security software.

US carrier T-Mobile has disclosed that it will no longer stock BlackBerrys in its retail stores, though customers will still be able to order the phones and have them shipped to them.

Canadian carriers Telus and Rogers declined to say whether they were making any changes to how they would stock or promote BlackBerry devices. Bell said it continues to stock BlackBerry products.

Last week, BlackBerry disclosed that it would stop promoting its phones as consumer devices, heeding the growing dominance of Apple’s iPhone and devices on the Android operating system.

Even large business consumers have been reluctant to sign new contracts with BlackBerry in recent months. Reports have pegged financial services giant Morgan Stanley as one BlackBerry customer that has held back from signing a new contract.

The BlackBerry smartphone remains popular with corporate and government workers, though earlier this year the company launched a product that migrates its popular security features to other devices.

A product called Secure Work Space allows Apple and Android users to separate their data and work apps, such as email and calendars, from their personal apps allowing for a security standard once only available on BlackBerry phones.

A plan to cut about 40% of Blackberry’s global workforce, about 4,500 jobs, is also underway.

©The Canadian Press