The senior executive departures are piling up at BlackBerry Ltd. as the company prepares to report bleak third quarter results this Friday.
On Monday, the Waterloo, Ont. smartphone maker confirmed that Rick Costanzo, executive vice-president of global sales, and Chris Wormald, vice- president of strategic alliances, have decided to leave the company. Both are believed to have left on their own volition after finding jobs elsewhere.
Also on Monday, PR and public affairs giant Hill + Knowlton Strategies Canada announced it had hired BlackBerry’s director of global public policy, Mark Cameron. The Ottawa-based lobbyist, who previously worked as director of corporate affairs for Ontario Power Generation and before that as a policy and research director in the Prime Minister’s Office, will be H+K’s deputy practice leader of its national energy practice, starting early in the new year.
The three join former chief marketing officer Frank Boulben and chief operating officer Kristian Tear, who were let go shortly after John Chen took over as interim CEO a month ago. Mr. Chen’s recruitment was part of a transformation that saw the company’s largest shareholder, Fairfax Financing Holdings, pull a takeover offer for the company and instead lead a $1-billion convertible debenture refinancing. Chief financial officer Brian Bidulka has also been replaced by controller James Yersh, although he is staying on as an adviser for several months.
Top-level departures following the arrival of a new CEO are “pretty standard stuff … especially if a company is troubled,” said independent industry analyst Jack Gold. “New management generally wants to bring in people they feel comfortable with. You’ll probably see more of this.”
The departures come in the lead-up to this Friday’s release of third-quarter results. Analysts polled by Bloomberg are forecasting, on average, that the company will lose 45 cents (U.S.) per share, compared to a 2-cent profit in the same period a year earlier. Revenue is expected to be $1.58 billion, down more than 40 per cent year-over-year.
“I don’t think anybody expects the results will be good,” Mr. Gold said. “It will be a question of how bad they are. A good sign could be that the losses are much more in check than they were” in previous quarters. The company’s deteriorating results have fallen short of analyst expectations in five of the past eight quarters.
Jefferies analyst Peter Misek said in a note Monday that the company is “facing Herculean challenges,” including recent survey results showing it is slipping well behind Microsoft Corp. as the perceived third-place smartphone platform provider, trailing industry leaders Apple (iOS) and Google (Android).
Mr. Misek wrote the company will burn through a “substantial” amount of its cash through the rest of its current fiscal year and the following year, but said the company’s financing “allays near-term liquidity concerns.“ He forecast the company’s total cash would decrease to $1.2 billion by early 2015, at the end of its next fiscal year. It had $2.6 billion in cash as of the end of its last quarter.
Mr. Chen, the former CEO of database software firm Sybase, is also expected to shed more light on his turnaround plan and strategy for the company on Friday. His few public comments so far suggest little deviation from the course followed by predecessor Thorsten Heins, and Mr. Chen has warned the company’s results will continue to deteriorate for several quarters before they improve. “It is clear that the direction of business faces massive downward pressure as confidence around BlackBerry’s long-term viability diminishes," Mr. Misek wrote.