New BlackBerry executive chairman and interim CEO John Chen has begun what is expected to be an extensive purge of the company’s top ranks.
Gone are predecessor Thorsten Heins’s top lieutenants, chief operating officer Kristian Tear and chief marketing officer Frank Boulben, the company said Monday. Chief financial officer Brian Bidulka is also leaving, although he will remain a “special advisor” to the CEO for several months, and is being replaced by controller James Yersh. Roger Martin, the former dean of the University of Toronto’s Rotman School of Management, is leaving the board. Mr. Martin said in a statement he is focusing on non-Canadian appointments, adding that he felt the “transition that has just taken place at BlackBerry afforded a good time to step off that board without disrupting anything.” David Kerr also left the board this month.
“This is just the beginning; there will be more management changes,” said a source familiar with the situation, who added Mr. Chen is evaluating the senior ranks and removing those he deems to be ineffective: “It’s important to send a message to the broader staff in Waterloo that he’s serious about changing the culture.”
The shakeup is Mr. Chen’s first move since the former CEO of database software firm Sybase joined two weeks ago, upon the closing of a $1-billion recapitalization led by shareholder, Fairfax Financial Holdings. It comes less than a month before the release of third-quarter results many believe will show a continued deterioration of BlackBerry’s business. Given the uncertainty surrounding the company following a strategic review and an abandoned takeover bid by Fairfax, “we think that the ongoing business will continue to be significantly impaired,” Jefferies analyst Peter Misek said in a note.
Analysts polled by Bloomberg expect BlackBerry to post third-quarter revenues of $1.6-billion (U.S.), down 41 per cent year over year, and a loss of 41 cents per share, compared to a 22-cent loss.
Mr. Chen said in a statement he would “refine the company’s strategy,” though several observers noted he appears to be aligned with company’s current strategy of selling devices, managing fleets of smartphones for corporate and government customers and building its BlackBerry Messenger instant messaging service. The company is also in the midst of a steep cost- and job-cutting effort. “He needs to lay down his roadmap for investors to understand and follow,” said Veritas Investment Research analyst Neeraj Monga. “Then perhaps we can have an opinion about whether it will succeed or not. Certainly the management in place at BlackBerry has not been able to deliver on BlackBerry’s promises.”
Mr. Chen has only dropped one hint about strategic changes: He is a fan of the firm’s QNX software unit, whose systems enable automobiles to communicate wirelessly with dealers’ servers. “Nobody is really a leader” in the so-called “machine-to-machine” business but QNX has “all the ingredients” to become that, he told the Globe this month. The business now accounts for little of RIM’s revenues.
Mr. Heins made Mr. Tear and Mr. Boulben his two key hires after becoming CEO in early 2012. Each scored multimillion-dollar pay packages in their first year, charged with streamlining the company’s operations and supporting the launch of the BlackBerry 10 smartphone platform. But the two ran afoul of co-founder and former co-CEO Mike Lazaridis, telling him just before a board meeting last year they believed the market for keyboard-equipped mobile phones – RIM’s signature offering – was dead, the Globe reported in September.
An incensed Mr. Lazaridis told directors that it would be a mistake for BlackBerry to turn away from a product that had always done well with large customers and to focus on selling an all-touch smartphone in a market crowded with them. Although some directors, including Fairfax CEO Prem Watsa, agreed with him, management still led the BlackBerry 10 launch with an all-touch Z10 in January. The device sold poorly, as did the keyboard version, the Q10, which appeared several months later.
Mr. Boulben, who described himself as a “a high-tech global marketer with international charm” on the personal website for his August 2013 wedding to Donald Trump’s New York real estate broker Kim Mogull, also earned criticism for the marketing campaign that supported the Z10 launch, including a confusing Super Bowl advertisement which some board members hated. Some observers had questioned whether Mr. Boulben was the right person for the job after spending most of his career in Europe, while BlackBerry’s top issue was its waning business in the United States.
Editor's note: David Kerr's first name was incorrect in an earlier online version of this story.