BlackBerry’s sales drop to 2007 level as CEO supports hardware focus

This week John Chen – the new Chief Executive Officer of BlackBerry Ltd. gets the chance to convince the investors he has the right attitude in order to revive a unit thats pulling the companys sales back down to the levels of 2007, by rejecting calls to exit the hardware business.

Mr. Chen was picked for the position by the largest investor of BlackBerry and sticks to the point that the company doesnt have to get rid of its unprofitable smarphone business, while most investors and analysts truly believe the BlackBerry should become focused on more remunerative software and services. The quarterly revenue drop of the company is estimated by analysts to 42%.

The unwillingness of BlackBerrys CEO to put the hardware business behind the companys back, is resembling Chens predecessors attitude. Mr. Chen, however, has a previous experience of organizing a software-let turnaround, which will provide him with the investors patience.

One of the analysts working for Atlantic Equities LLP – James Cordwell said on this occasion: “Hes got the mandate – I suppose the constraining factor is time. A change in direction is what people need.”

It seems that the new CEO of the company has already begun making some changes, considering the departures of BlackBerrys previous marketing, operations and finance chiefs recently. On December the 18th the company announced that John Sims, who is a former colleague of Mr. Chen, was hired to run global enterprise services. Today BlackBerry completed its list with two more names of executives – James Mackey, who is appointed to lead the corporate development and strategy of the company and Mark Wilson, who is appointed to oversee marketing.

These personnel moves are considered only part of the more serious strategic changes needed to win the confidence of the shareholders, who have been more sceptical about the companys future.

One of the CIBC World Markets analysts – Todd Coupland commented: “BlackBerry has the cash resources to get through its transition to cash flow break-even sometime in fiscal 2015. The turnaround will take time. The question is, given how well resourced everybody else in this space, what can he [Mr. Chen] actually do with the constrained resources hes going to have. Survive. Yes. Thrive? Not so sure.” Atlantic Equities Cordwell forecast that if the company survives to 2015, it will probably considerably smaller and more focused on managing fleets of smartphones.

According to Bloomberg, the current share price of BlackBerry Ltd. Is 0.15% down, and its one-year return rate is 52.04% down.