It has only been a few weeks since the new CEO John Chen has taken over from Thorsten Heins, yet we are starting to see the direction BlackBerry (BBRY) is being steered. John Chen has released a couple of blogs that are very direct, and he has made major organizational changes. The focus is moving back toward BlackBerry's core business, which is the corporate enterprise environment.
John Chen's Background
The new interim CEO of BlackBerry is most noted for turning around Sybase in the late 90s. John Chen first returned Sybase to profitability and continued to improve its balance sheet. The next step was to change Sybase into a high growth innovator, which ultimately led to the buyout from SAP AG (SAP).
John Chen has been appointed to many prominent boards; such as Walt Disney Company (DIS), Wells Fargo (WFC) and CIT Group, as well as many start-ups. He also sat on the advisory committee for the New York Stock Exchange.
Behind John Chen's business savvy is a technical background in Electrical Engineering from Brown University and a graduate degree from the California Institute of Technology.
John Chen's Blog
The latest blog that was written by the CEO to BlackBerry customers was to reiterate his commitment to the MDM (mobile device management) enterprise platform. Within the blog, the following statement was made:
Our EMM customer base is much larger than any of the other vendors in the Gartner Magic Quadrant for Mobile Device Management - and is growing.
I previously have used the Gartner Magic Quadrant in some of my earlier BlackBerry articles and have included the May 2013 chart. Gartner has noted that BlackBerry was included for the first time in the matrix this year with its Mobile Fusion product. It would be accurate to consider BlackBerry a start-up within this group.
In another previous blog, John Chen stated:
We Are Committed to Reclaiming our Success
We have begun moving the company to embrace a multi-platform, BYOD world by adopting a new mobility management platform and a new device strategy. We are also leveraging our tremendous assets, including BBM our network and QNX. While we are proud of these accomplishments, we know there is more work to be done.
This next phase of BlackBerry is bringing all the enterprise technology together to form a coherent solution for Fortune 500 organizations.
The new hiring shows a focus on the enterprise technologies and this is during a time when there are many layoffs.
Director of US Government sales
This job posting is in-line with the new direction of CEO John Chen's push back into the corporate and government sectors. Sales within the United States have been very poor lately, with many departments looking at alternative solutions to BlackBerry.
Cassandra Platform Engineer
Cassandra is a database model that is sometimes referred to as no-SQL. The main advantage to Cassandra over other SQL databases is there are no single points of failure. While I will not go into the technical aspects in this article, it is important to note that BlackBerry is further developing its NOC infrastructure.
Process Improvement Advisor
This new position illustrates the recognition that the launch of BB10 was prone with errors in the implementation. Over the past 12 months, analysts and other professionals have been critical of the marketing and the general handling of the company. Streamlining the process for product roll-out and supply chain management will be a strength that CEO John Chen brings to BlackBerry.
I feel it is safe to say that the handset business has been less than enjoyable for stockholders. While arguments can be made on both sides of the fence if it was a limited success or not (which we have in other articles in the past year), the focus is moving away from the handset towards the enterprise. QNX (the mobile operating system) did require a mobile handset to be nurtured within the MDM ecosystem. The handset did serve its purpose with respect to QNX. Now, the Q10, Z10 and Q5 are being written down in a similar fashion that the playbook was two years ago. Many wireless providers will only provide BlackBerry phones through their corporate departments and in select stores.
An Aside on 10.2.1
In the short term, I have resigned myself that any new BB10 OS release will have no material impact on BlackBerry as a whole. I wouldn't even be surprised if BlackBerry released a new version that could out think IBM's Watson super computer while making me dinner, and there still would be little share price movement. However, in the very long term, innovative technology tends to have a material impact.
It would be irresponsible for me not to mention BlackBerry Messenger, as there is clearly a focus on bringing forth this technology. I previously mentioned that BlackBerry is treating BBM as a separate division within its organization. I feel this is prudent, as to keep a focus on its core strengths within the enterprise and leverage BBM at a later date when it fully matures.
BlackBerry has hit a floor of around $6 to $7 a share, and this has been consistent over the past 12 months. With the new leadership, this may be a good starting point for long-term bulls. The focus on the corporate side of things will help take BlackBerry out of the spotlight relative to the past year. Initially before writing this article, my thoughts were to wait and see for the next few months before initiating any new long positions. With the new leadership and the focus on BlackBerry's historic core strengths, it is an option to open up a long position as a contrarian move. My only concern would be the December earnings date just before the holidays; there may be additional write downs that lower the stock price. If the balance sheet is stabilized moving forward and you have a high risk tolerance, then a long position may be an option for you. This is beginning to look like a start-up company with a sizable customer base and a recognizable brand.