BlackBerry's Clock Is Ticking—Loudly
A Management Reshuffle Shows the New CEO Is Trying to Take the Smartphone Maker in a New Direction, but Time Isn't on His Side
New BlackBerry chief John Chen is wasting no time in trying to rescue the smartphone maker from its long line of stumbles. But he has considerably less time to do so than his predecessor.
Accordingly, Mr. Chen is moving fast. On Monday, just three weeks after taking the top job, he announced that three top-level executives plus one board member will be leaving. While new CEOs often reshuffle their leadership teams, Mr. Chen's quick moves are evidence that he is planning major changes for the company.
Mr. Chen has continued to signal that devices are part of BlackBerry's future. Yet it is notable that two of the dismissed executives—Chief Operating Officer Kristian Tear and Chief Marketing Officer Frank Boulben —had been brought on by previous CEO Thorsten Heins and had been key in implementing his plan to bet the company's future on a new operating system and family of devices. That bet has failed, leaving BlackBerry with few options.
Mr. Chen's deep background in enterprise software is a good indicator of where the board wants him to take BlackBerry. With the near-collapse of its handset business, BlackBerry generates about half of its revenue from services that help ensure the security and reliability of its network. Many believe BlackBerry could survive as a provider of such services across other wireless platforms such as Apple's AAPL +1.02% iOS and Android, rather than keeping those tethered to its own handset. Even so, it is a Hail Mary pass at this point.
When Mr. Heins took over BlackBerry in early 2012, it was still drawing more than $4 billion in revenue and shipping more than 11 million smartphones per quarter, with operations generating more than $1 billion in cash flow. Revenue has since plunged to $1.6 billion as of the last quarterly report, with BlackBerry being able to recognize only about 3.7 million smartphone shipments in the period and operations consuming $136 million in cash.
Mr. Chen's moves may help speed change at BlackBerry. But no matter how fast he goes, it may still prove to be too little, too late, given the magnitude of the challenge facing him.