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BlackBerry's 'Chances of Success Are Minimal'

By Craig Galbraith
December 19, 2013 - News

Despite Fairfax Financial's decision to invest $1 billion into BlackBerry, the once-great smartphone maker isn't instilling confidence in industry watchers with its latest news.

More executives are on the way out under the watch of interim CEO John Chen, who took over when Thorsten Heins stepped down last month. Global sales EVP Rick Costanzo and M&A strategist Chris Wormald are expected to leave the company soon, The Wall Street Journal reported. This follows the recent exits of BlackBerry's COO, CFO and chief marketing officer.

BlackBerry appeared on the verge of selling to Fairfax Financial earlier this fall, but the deal fell through; instead, it made a significant financial investment, and to little avail, says Wally Swain, senior VP of research at Yankee Group.

“New CEO John Chen is certainly ensuring that he will get 100 percent of the credit if things turn around. If they do not, he can say the ship was already listing too badly," Swain noted. "The good thing about being an 'interim' CEO is that you get to have your cake and eat it too on the issue of responsibility. I am not criticizing him. With a challenge this profound, the chances of success are minimal and he has to think about his own brand over the long term. He will certainly not have to worry about members of his exec team saying, ‘We tried that and it didn't work.’ The problem is there will be no one to provide adequate feedback if something really is a bad idea because of some deep issue with the software or customer contracts or distribution channels or whatever."

BlackBerry's swoon started years ago when Apple and a bevy of Android manufacturers introduced user-friendly phones and big application marketplaces that left the Canada-based company in the dust. Even many of its most ardent defenders – its base of business users – have made the switch to another device maker.

The company rolled out the BB10 operating system and a pair of well-regarded smartphones – the Z10 and the Q10 – early in the year as a last-ditch effort to return to prosperity, but none was met with great fanfare by consumers. BlackBerry's stock price has fallen from $18 per share in January to a little more than $6 today.

"Chen is smart enough and experienced enough that I can only assume he has weighed the two risks and deemed that in the complete remaking of BlackBerry, the cost of having naysayers is greater than the cost of losing experienced executives," Swain added. "That means it is better to start fresh with a new team than have some of those directly or indirectly responsible for the mess trying to justify previous decisions."

BlackBerry remains a player to be reckoned with in parts of Asia and Africa, but it has lost customers by the bucketful in two areas it needs them most – North America and Western Europe.

Follow senior online managing editor @Craig_Galbraith on Twitter.

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