BlackBerry: Just Leave The Stage, John

| About: BlackBerry Ltd. (BBRY)

Summary

BlackBerry reported first quarter earnings today.

Hardware sales continue to disappoint.

John Chen must go.

BlackBerry (NASDAQ: BBRY) has just released the Q1 FY17 earnings, and investors will be extremely disappointed with the hardware sales. A brief on the quarterly earnings can be found on SA.

I will jump straight to the hardware segment, which has been crippling the company for a long time now. CEO John Chen's insistence on continuing with the failing segment has seen the company report another set of poor numbers.

Income statement for Q1'FY17 indicates the contribution of each of the three segments - Software & Services, Mobility Solutions, and Service Access Fees.

Click to enlarge

Mobility Solutions includes BlackBerry smartphones and device software licensing.

As can be seen, the revenue contribution from hardware segment has declined 20 percent to $152 million from the last quarter contribution of $190 million. On a year-on-year basis, the decline is a devastating 44 percent.

The company had some support from the Software & Services segment which earned $142 million while the SAF continued its streak of declining numbers with a contribution of $108 million.

The CEO Must Go!

Even if the numbers don't disturb you enough, here is what should. In one of my earlier articles on BlackBerry - John Chen: 'No, I'm Not Giving Myself More Time' - the CEO said that things look very good for the handset segment. Clearly, that is not the case!

What angers me the most about him is his unwillingness to face the reality that BlackBerry hardware is a dying business. Someone once asked me why is the investing community so fixated with the company's hardware segment, to that I replied - 'every forward step the company takes in the devices market is pushing the company two steps back.' The company could utilize the time, energy and resources significantly better without the devices' pain.

The CEO's ineptitude in handling the tumbling devices market, and his stubbornness in not realizing that the company will be well-off with being a software-only enterprise is killing the brand. His dishonesty and blatant disregard to the facts and figures is appalling.

He must leave the stage, or investors will be left with nothing.

Conclusion

I do not care what the market says today about the company's results. Whether the stock goes up or down today is a very trivial matter. What the long-term investors should be worried about is the ability of the top-level management to steer this ship, which can be easily done if some unwanted cargo is let go of. But, will they?

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.