Bloomberg News

BlackBerry CEO Chen Unsure If Company Can Be Iconic Again

July 28, 2014

BlackBerry Ltd. Chief Executive Officer John Chen

BlackBerry Ltd. Chief Executive Officer John Chen said, “I am comfortable with where the company is today, how we managed our technology, our businesses, the margins, the distribution channel or the new products that’s coming out.” Photographer: David Paul Morris/Bloomberg

BlackBerry Ltd. (BBRY:US) Chief Executive Officer John Chen, who is working to remake the company, said he’s unsure if it can regain iconic status.

“I am comfortable with where the company is today, how we managed our technology, our businesses, the margins, the distribution channel or the new products that’s coming out,” Chen said in a Bloomberg Television interview with Emily Chang. “Whether it’s going to be good enough to be iconic again, OK, that’s something I need to chew on. I don’t know the answer to that question.”

The smartphone maker, whose users once called their devices CrackBerrys because they were so addictive to use, fell behind as a new generation of gadgets led by Apple Inc.’s (AAPL:US) iPhone lured away consumers. BlackBerry’s global shipments are projected to fall almost 50 percent this year to about 9.7 million smartphones, according to a forecast in May from IDC.

Related: BlackBerry Shares Rise as Investors Buy Turnaround Plan

Chen said BlackBerry has no acquisition offers on the table. The handset and mobile software-and-services provider is instead focused on turning its ailing business around independently, and its chances of success are “better than 80/20,” Chen said.

Since taking over the Waterloo, Ontario-based company in November, Chen has been winning over investors with a turnaround strategy that has included cutting costs, selling most of the company’s property in Canada and building revenue from business services and its BBM instant-messaging service to compensate for declining handset sales.

“I don’t have any offers on my desk,” Chen said in the interview. “If people would like to talk, I mean, talk is not an offer.”

Recovery Threatened

The recovery may be threatened by a pact between Apple and International Business Machines Corp. to collaborate on business services. That encroaches on a key component of Chen’s overhaul: shifting the company from flagging smartphone sales toward software-based services for corporations, which generate higher margins.

BlackBerry shares, which had increased 52 percent this year before the Apple-IBM deal was announced July 15, slumped 12 percent the following day. The stock fell (BBRY:US) 3.1 percent to $9.95 today.

As cost cuts, asset sales and cash preservation help drive Chen’s turnaround, the company is still planning to reach break-even cash flow by the end of this fiscal year. Chen also expects to return to profitability during the year that will end in March 2016.

To contact the reporter on this story: Olga Kharif in Portland at okharif@bloomberg.net

To contact the editors responsible for this story: Sarah Rabil at srabil@bloomberg.net Will Wade, Bruce Rule


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Companies Mentioned

  • BBRY
    (BlackBerry Ltd)
    • $9.94 USD
    • -0.29
    • -2.92%
  • AAPL
    (Apple Inc)
    • $100.75 USD
    • 0.64
    • 0.64%
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