BlackBerry said this week that it has entered a handset production deal that will lower the risk the company will have to take larger writedowns on unsold smartphones.

The company's stock has already increased as much as 17 percent after BlackBerry announced the five-year deal with Taiwan's Foxconn Technology CO.

The unique deal means BlackBerry won't have to pay upfront for parts used in the devices made at Foxconn's Mexican and Indonesian factories.

 Foxconn will help with designing, developing, designing and shipping out handsets.

CEO John Chen, who took over the company last month, said he feels the deal could help BlackBerry post a profit for the fiscal year that begins in early 2015.

"It's almost like BlackBerry is disposing of its consumer handset business without actually disposing of it," said Jefferies analyst Peter Misek, who likened the deal to what Hewlett-Packard Co and Dell have done with laptops.

The latest BlackBerry devices running on BlackBerry 10 software have so far failed miserably, forcing the company to write off $1.6 billion of inventory and supply commitments last quarter.

As of Dec. 20, stock had fallen 47 percent in 2013, though it was last trading up 14 percent on Nasdaq at $7.13.

"The most immediate challenge for the company is how to transition the devices operations to a more profitable business model," said Chen, who is credited with turning around Sybase, a database and mobile software company, before it was sold to German software company SAP AG in 2010.

See Now: OnePlus 6: How Different Will It Be From OnePlus 5?