John Giamatteo served as president and chief revenue officer of McAfee Corp. from 2013 through early 2020.Supplied
BlackBerry Ltd. BB-T has promoted cybersecurity president John Giamatteo to replace recently departed chief executive John Chen and killed plans to spin off its connected car software business into a separate public company.
The assignment, announced Monday, is likely to be transitional in nature for Mr. Giamatteo, who joined Waterloo, Ont.-based BlackBerry in October, 2021. The company now plans to restructure its two business units into standalone entities in a way that suggests it is preparing to sell one outright. Mr. Giamatteo will keep his job running the cybersecurity business in addition to his CEO duties.
Under the new plan, the board has ditched plans for an initial public offering next spring that would have seen it float 20 per cent to 30 per cent of its other, internet-of-things (IOT) unit, which sells connected car software. The earlier plan came out of a board-approved strategic review announced two months ago, weeks before Mr. Chen departed BlackBerry after 10 years as CEO. But a recent spate of underwhelming technology IPOs suggests investor enthusiasm for new issues could remain muted well into 2024.
The 2,800-person company’s centralized corporate functions will be separated and streamlined into teams specific to each unit “with a view to each division operating independently and on a profitable and cashflow-positive basis going forward,” BlackBerry said in a press release Monday.
The board believes separating the two “will open up a number of strategic alternatives that can unlock shareholder value,” chairman Richard Lynch, who served as interim CEO after Mr. Chen’s departure last month, said in the release. The company said it will hire a consulting firm to help with the separation and “right sizing process” and move quickly to reorganize.
“The Board and I are fully aligned on the next steps needed to unlock the value within BlackBerry, and work on this effort will proceed at full speed,” Mr. Giamatteo said. The new CEO, a 57-year-old native of Long Island, N.Y., who is based in Dallas, heads the weaker of BlackBerry’s two divisions but brings senior industry experience to the former smartphone giant.
Mr. Giamatteo previously served as president and chief revenue officer of Silicon Valley cybersecurity stalwart McAfee Corp. from 2013 through early 2020, and before that, as chief operating officer of technology companies AVG Technologies NV, Solera Inc. and RealNetworks. Inc. From 1988 through mid-2005, he worked at Nortel Networks Corp., finishing as president and CEO of its Asia-Pacific business.
His experience and track record “means he is strongly positioned to drive this critical transformation of BlackBerry,” said Mike Daniels, chair of the board’s compensation, nomination and governance committee, in the release.
Mr. Chen, a veteran technology turnaround specialist, was appointed in November, 2013, to replace Thorsten Heins, who had taken over in early 2012 from long-time co-CEOs Jim Balsillie and Mike Lazaridis. Mr. Chen oversaw one last unsuccessful attempt to revive the rapidly shrinking handset business before the company retreated from smartphone manufacturing, slashing costs and staff. Today, BlackBerry no longer supports its former device operating systems.
On Mr. Chen’s watch, BlackBerry acquired software businesses that offered centralized device management and cybersecurity. It also embarked on a lucrative campaign to extract payments from other companies for alleged use of its smartphone-era patents before selling most of its intellectual property earlier this year. Its IoT division, which is managed out of another acquired company, Ottawa-based QNX, delivered brisk growth supplying in-car internet software to all 10 of the world’s largest automakers, who have put it to work in 235 million vehicles.
Mr. Chen’s protracted turnaround attempt was aided by billions of dollars in legacy high-margin service-fee revenue negotiated by his predecessors with telecom carriers when BlackBerry devices were in hot demand, and which poured in for years afterward.
But he otherwise delivered little payoff, leading to growing discontent among stakeholders about the hodgepodge of businesses Mr. Chen claimed would someday provide convergence benefits. The cybersecurity business has disappointed, delivering far less growth than expected, including during Mr. Giamatteo’s tenure. And while IoT is expected to deliver 20-per-cent growth for years, BlackBerry recently cut the unit’s revenue forecast for this year.
BlackBerry’s shares have languished for years. The exception was a brief spike when it became a “meme stock” in 2021, and Mr. Chen promptly sold US$24.8-million worth of shares, which had only vested because of the craze-fuelled surge – prompting outrage and pushback from proxy advisory firms.
The stock now trades at roughly the same level it was 24 years ago when its wireless e-mail device was the world’s hottest tech gadget. Last year, BlackBerry drew interest from British hedge fund Fifthdelta Ltd., which bought enough of the company’s stock to become its largest shareholder, prompting the launch of this year’s strategic review.
BlackBerry releases third quarter earnings on Dec. 20.
Sean Silcoff