BlackBerry (BBRY) has a new CEO John Chen at the helm, and he has been replacing key executives. This Fridays earnings call was very different; as ex-CEO Thorsten Heins cancelled September's earnings call, leaving 6 months of questions unanswered. John Chen has not been shy, and has made major changes in the past month. The earnings call finally gave investors insight into the new direction BlackBerry is heading, and provide for new investment opportunities.
Sybase is the new BlackBerry
As I have covered in a previous article, John Chen is noted for turning around Sybase, and eventually selling the company to SAP (SAP). It has been made clearer during the past week, that the personnel involved in Sybase's transition are key to John Chen's current plans. The following key people will be joining BlackBerry in January, and have previously worked with John Chen.
John Sims, President of Global Enterprise Services
John Chen has selected Mr. Sims from SAP, where he served as SAP's mobile services President. John Sims was selected partly due to his notoriety of redefining brands and reshaping businesses.
James S. Mackey, Executive Vice President for Corporate Development
Again another selection from SAP, where Mr. Mackey was responsible for corporate development. This included SAP's mergers and acquisitions department, and over 40 acquisitions were facilitated.
Mark Wilson, Senior Vice President of Marketing
Previously acting as Senior Vice President of Corporate Marketing for Sybase, branding, advertising and lead generation were key responsibilities.
These three appointments clearly indicate the direction that CEO John Chen is heading. All the new executives have strong business to business skills, highlighting a focus on the BlackBerry Enterprise services. While it is my belief that BlackBerry will continue to service the consumer mobile devices, the emphasis will not be in this area moving forward. This is also in keeping with previous statements John Chen has made on his company blog. As of the earnings call this was also confirmed, as the tone was clearly focused on the Enterprise solutions.
Reading between the lines, a strong team that the new CEO can trust will also be advantageous to ensure the new implementation plan proceeds uninterrupted. The board of directors led by Prem Watsa, has been very vocal with regards to their vision for BlackBerry. Regardless of investors' opinion of ex-CEO Thorsten Heins performance, he appeared in hindsight as a front person for the board. The new executive team appears to be more robust and independent from the board of directors. It was also refreshing during the earnings call the CEO stated "our lawyers are probably going crazy now", in reference to off the cuff comments made by himself. Again, this shows leadership independent of the board of directors.
Over the past few months, BlackBerry has been increasing the rate at which losses have been recorded. This was done to make BlackBerry more attractive in a potential acquisition. Now that BlackBerry has announced the company is no longer for sale, the big question remained are we finished with the write downs. From the enterprise side, BlackBerry has not incurred huge losses, and the business has been somewhat steady. Most of the losses have been the result of minimal sales through BlackBerry's channel partners. Once most of the losses have been recorded, the share price should stabilize and earnings should return to the positive side of the number line.
More writedowns have occurred that contributed to the $4.4 billion loss. A more substantial analysis will be conducted over the weekend, to provide color as to future writedowns.
With the alignment of all these variables, a short term spike in the undervalued share price might be in order. The big question is with BlackBerry stabilizing, when will major short covering occur. Over the long term, a slow steady rise would be more indicative. Possibly even lower than the current 10 year Treasury bond rate.