In November, it marked the one year anniversary for John Chen getting appointed as BlackBerry’s CEO. Chen helped complete a two year strategy to regain profitability by selling assets, striking partnerships to lower manufacturing costs and broaden app offerings, and raising cash through the sale of real estate holdings in its hometown of Waterloo, Ontario.
“Once we turn this company to profitability again, I will do everything I can to never lose money ever again,” Chen told Reuters this week in an interview. “That is definitely something I am very focused on doing.”
If you’ve been following the BlackBerry story, Chen is likely the best possible CEO for a turnaround. Chen made his name at Sybase, a struggling database software firm that he rescued and sold a decade later to SAP for $5.8 billion in 2010.
“If you look at my track record at Sybase, I think we made money for some 60 quarters in a row, even when the dotcom bubble blew up we were profitable. I like that philosophy,” said Chen.
“We [BlackBerry] will survive as a company and now I am rather confident,” he added. “We’re managing the supply chain, we are managing inventories, we are managing cash, and we have expenses now at a number that is very manageable. BlackBerry has survived; now we have to start looking at growth.”
BlackBerry is now beginning to recapture interest in the company and it’s offerings. The new flagship smartphone, the BlackBerry Passport, sold out in its first weekend of availability. Chen says he’s “reasonably comfortable” the company can keep making money from its handset business, given operating margins, citing orders for the Passport have increased.
“I’m happy in the receptivity of the design. I’m happy that this product is a successful product, but we did not make that many of them, so it is in limited supply almost everywhere,” Chen added. The company is also beginning to once again hire new employees and acquire smaller companies.
“He [Chen] stepped in to catch a falling knife, which is what BlackBerry was at the time losing $1 billion plus,” said Prem Watsa, whose Fairfax Financial Holdings Ltd is a major shareholder in BlackBerry. “He came in and very quickly stabilized it and very quickly laid out a roadmap to breakeven.”
BlackBerry still has quite a ways to go before profitability is gained. Though, investors, analysts, and mainstream media seem to have dropped the idea that the company is going to fizzle out and die.
“John Chen has succeeded in changing the conversation about BlackBerry, and that is probably true both internally as well as externally,” said IDC technology analyst John Jackson.
“Overall we think John is doing a solid job, but our concern continues to be: how will BlackBerry drive demand for its product,” said Morningstar analyst Brian Colello. “The demand side of the equation is still a concern, both around selling millions of devices each year and converting enterprise software users into paying buyers in a very competitive market.”
At this point, most analysts (25 out of 37) have a ‘hold’ rating on BlackBerry, shows Thomson Reuters data. Only one currently has a ‘buy’ rating, with the rest telling clients to ‘sell’ despite BlackBerry shares strengthening since Chen took the reigns as CEO.
Nevertheless, BlackBerry is regaining its position and its focus will be on a core set of smartphones that are most likely to succeed. “I’m not going to build a general purpose device, simply because it is a 5-inch touchscreen,” he said, referring to what’s common in the market right now. “The Chinese can build one for 75 bucks, I can’t get enough parts together for 75 bucks.”
2015 will certainly make for an interesting year for BlackBerry’s device portfolio. Perhaps, we will see a new high-end all-touch and slider emerge within the year.