The recently released BlackBerry Passport. Source: BlackBerry

After a near half decade of poor performance, investors of beleaguered handset maker BlackBerry (NYSE:BB) finally have reason to celebrate. The company appears to be in the midst of a turnaround as it finds itself up over 40% year to date.

It wasn't always this way, the company is widely credited with producing the first smartphones with mass adoption in the United States. As late as the second calendar quarter of 2010, BlackBerry -- then Research In Motion -- had the second-largest worldwide smartphone market share by operating system behind Symbian. Next quarter, its market share dropped below Apple's iOS and Google's Android and never recovered.

The company continued to struggle in the years following, culminating in a rather unceremonious exit by prior CEO Thorsten Heins after a failed attempt to prep the company for a sale to a consortium led by Fairfax Financial. At its 2013 nadir, the market valued the company at approximately $3 billion -- a figure it is now 60% higher than. One has to ask what happened and, more importantly, is it sustainable?

Two words: John Chen
For those who question the value of a focused and talented CEO, John Chen is a case example of why this matters. Before taking the reins from BlackBerry, John Chen cemented his reputation as a turnaround artist at Sybase.

In his time at the database company, John Chen was able to turn around Sybase from a slower-growth technology company to an innovative highflier. In the process, he led Sybase to 55 straight quarters of profitability and grew its market cap from under $400 million to $5.8 billion when it was acquired by SAP.

Of course BlackBerry investors hope for a similar result, but BlackBerry will be a harder company to turn around. Quickly after being named BlackBerry's CEO, John Chen pulled no punches when describing BlackBerry's path forward. First, Chen characterized the company as a sick patient; later he characterized the company's chances of a turnaround at 50-50.

So how can BlackBerry move forward?
In rather frank language, John Chen outlined how his predecessors -- Thorsten Heins, Mike Lazaradis and Jim Bastille -- led BlackBerry astray. Chen faults their focus on the consumer market at the detriment to BlackBerry's enterprise market. BlackBerry's latest operating system, the BlackBerry OS 10 hasn't caught on in consumer markets among intense competition from Apple's iOS and Google's Android.

The path forward is to double down in the enterprise markets and putting less of an emphasis on the consumer markets, especially the developed markets of North America and Europe. In an attempt to reconnect with the business-focused enterprise crowd, the company plans to release future BlackBerry phones with physical keyboards that were stripped out of the BlackBerry Z10. The company's newest offering, the BlackBerry Passport, reintroduces the keyboard.

The question: is this sustainable?
It is certainly safe to say that BlackBerry's valuation has improved faster than its financial results. The company is still struggling. In the recently reported second quarter, the company posted a narrower loss of $0.02 per share non-GAAP versus analyst expectations of $0.16. In addition, the company reported it sold 200,000 Passport phones in the first two days after its release.

With that being said, revenue growth continues to beguile the company. Friday they reported revenue of $916 million, missing analyst expectations of $950 million. For proper perspective, in last year's second fiscal quarter BlackBerry reported nearly $1.6 billion in revenue and has been trending downward since. So you have a company with narrowing losses, but one whose revenue footprint is becoming smaller. After throwing a Hail Mary with the BlackBerry 10 -- and missing -- BlackBerry needs traction ... and soon.

Final thoughts
BlackBerry investors are enjoying a rather favorable year in 2014. While much of this 40% return is merely the market becoming less bearish on BlackBerry rather than dramatic financial improvement, the company is narrowing losses. Whether this will be sustainable ultimately depends upon CEO John Chen's plans to address the enterprise set.

And while BlackBerry fans are enthused today about the BlackBerry Passport's sales figures, it is only 200,000 units -- Apple sold 10 million units its release weekend. As you can see, there's still of work ahead for the beleaguered smartphone maker.

Jamal Carnette has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.