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BlackBerry also announced Friday it is entering in to a five-year partnership with Foxconn, the Taiwanese company that assembles products in vast factories in China. Foxconn will jointly develop and manufacture certain new BlackBerry devices and manage the inventory of them.
"The most immediate challenge for the company is how to transition the devices operations to a more profitable business model," Chen said in a statement.
Its shares tumbled more than 7 percent in premarket trading.
BlackBerry reported revenue of $1.2 billion, down from $1.57 billion in the same quarter last year.
Chen has said the company "is very much alive" but is putting more emphasis on Blackberry's software business than its hardware business.
BlackBerry said it sold just 1.9 million smartphones in the quarter compared to 3.7 million in the previous quarter and said most of them were old BlackBerry 7 devices. This year's launch of BlackBerry 10, its revamped operating system, and fancier devices -- the touchscreen Z10 and Q10 for keyboard loyalists -- was supposed to rejuvenate the brand and lure customers. But the much-delayed phones failed to turn the company around and have led to a billion dollar loss last quarter and a multibillion loss in the third quarter.
"It was ugly, said Colin Gillis, an analyst at BGC Partners.
Gillis said allowing BlackBerry to be made in China could pose a problem for a company that relies on governments for a lot of its business. BlackBerry has long emphasized security.
"It opens up some security concerns. If you are a government agency with national security data running through your phones do you have concerns now that they are made by Foxconn," Gillis said.
Foxconn also assembles Apple Inc.'s products in vast factories in China.
BlackBerry's net loss amounted to $8.37 per share in the latest quarter. Its adjusted loss from continuing operations, which excludes restructuring and other items, was $354 million, or 67 cents per share.
Analysts polled by FactSet, on average, expect an adjusted loss of 43 cents per share on revenue of $1.66 billion.
Shares of BlackBerry fell 7.2 percent, or 45 cents to $5.80 in premarket trading.
BlackBerry did report a strong cash position at the end of the quarter with $3.3 billion and no debt, though it's burning through that stockpile. In the third quarter, BlackBerry spent about $400 million.
The BlackBerry, pioneered in 1999, had been the dominant smartphone for on-the-go business people and other consumers before Apple introduced the iPhone in 2007 and showed that phones can handle much more than email and phone calls. In the years since, BlackBerry Ltd. been hammered by competition from the iPhone as well as Android-based rivals.
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