Blackberry to be profitable by 2016: CEO Chen

BlackBerry CEO Chen: We have very high quality devices
BlackBerry CEO Chen: We have very high quality devices

Blackberry interim CEO John Chen expects the smartphone company to become profitable by 2016, adding that the new partnership with Foxconn will help the handset division make money.

"[We] need to see the growth in FY cannot be just from cost and containment and so forth, although we seem to be doing pretty (well) there," Chen told CNBC in an exclusive interview with CNBC on Friday.

The company struck a five-year partnership with Taiwan-based manufacturer Foxconn Technology to develop and manufacture handsets, starting with a lower-end device built for Indonesia and other emerging markets. Foxconn is also one of iPhone maker Apple's main suppliers.

(Read more: iPhone market share quadruples in China)

Shares of the stock spiked nearly 17 percent as investors welcomed the deal, despite another dismal quarterly report from the smatphone maker.

Blackberry posted a massive quarterly loss Friday, as sales of its smartphones declined and it booked asset impairment charges and inventory writedowns.

The company's stock has taken a huge beating over the last year, plunging nearly 50 percent.

"The number one thing I noticed (as CEO) was that our handset volume was dropping and with that, our fix cost was too high," explained Chen. "[Foxconn] has the ability to bring the cost down...and we will provide the software."

Chen also touted Blackberry's secure products, including the Blackberry Messenger system.

"The focus of the overall company is shifting toward enterprise, government customers and software services. The idea is to control the cost associated with the devices business and figure out how to get that as profitable as possible."

Earlier this month, Chen wrote in an open letter to customers that the company is "very much alive," saying reports of the company's demise are "greatly exaggerated." He reiterated its dedication to multiplatform mobile device management and enterprise mobility management.

(Read more: BlackBerry CEO: We're 'very much alive, thank you')

A former CEO at Sybase, which was acquired by SAP, Chen was appointed to his post last month.

"I think the market needs Blackberry to do well," he said. "This is a huge challenge and I love challenges."

—By CNBC's JeeYeon Park. Follow her on Twitter @JeeYeonParkCNBC.