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BlackBerry’s John Chen moving quickly, building support

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Blackberry CEO John Chen poses for a portrait in Toronto March 26, 2014. BlackBerry Ltd reported a smaller-than-expected loss on March 28, 2014 as new chief executive John Chen slashed costs, but a 64 percent drop in revenue underscored the challenge he faces in turning around the struggling smartphone maker. The Canadian company, which has lost most of the smartphone market to Apple Inc's iPhone and gadgets powered by Google Inc's Android operating system, has laid off thousands and agreed to sell most of its real estate. Chen said he expects to be cash flow positive or neutral by the end of the current fiscal year, which runs to early March 2015. He does not expect to turn a profit until sometime in the following fiscal year. Picture taken March 26, 2014. REUTERS/Mark Blinch (CANADA - Tags: BUSINESS SCIENCE TECHNOLOGY HEADSHOT)

As he wrapped up his first full quarter at BlackBerry’s helm, CEO John Chen wanted to let reporters know things aren’t as dire within the company as some have suspected.

“When I came in to the company we were on a path of a project that dramatically reduced our headcount,” he said during a media roundtable at the company’s Waterloo, Ont.,  headquarters after Friday’s earnings were released. “The reality of the mathematics when I came in in November only left me one choice, which was to let that project complete. But I also realized that you cannot ever cut yourself to glory.”

Clouds starting to lift

Although Chen has spent a significant amount of time meeting customers and other stakeholders, engaging with employees has helped him gain focus, as well. He says he recognized early on how the previous period of uncertainty had weighed on employees at the once-dominant firm.

“I fully understand why the employees have been very negatively affected and the morale is obviously not as high as one would like,” he said. “Having said that, I really do believe that people are getting back to work, which is a big thing. I think they are trying very hard to stay focused. We have a lot of very committed people in the company, a lot of diehards.”

Chen has moved quickly to solidify product plans – including upcoming new Z3 and Q20 models, restarting BlackBerry Bold production, and announcing BlackBerry Enterprise Service (BES) 12 and updates to BlackBerry Messenger – with partner Foxconn to design and build future products, and has set clear expectations about the company’s enterprise-centric roadmap. It’s an approach that’s winning him some support among analysts.

“I like him,” Ramon Llamas, research manager for IDC’s mobile phones team, said in an interview. “I like how he’s coming in, with an outsider’s perspective, untainted by any preconceived notions or relationships. He’s taking a look at everything with a very clear, black-and-white focus. Either something’s done or something’s not. Either something is good or something is bad. By and large he’s putting together a strategy that reflects that. There’s no grey area. You know where you stand.”

Turbulence ahead

Even so, one analyst contacted by Yahoo Canada Finance says it’s far too early to pass final judgment on Chen, who built a reputation for transformation at Sybase.

“All of the things he’s done so far are good, and I don’t want to deliver a negative report card on him,” said Ronald Gruia, director of emerging telecoms for Frost & Sullivan.

“Wherever he could control things, he’s done well. But he hasn’t done anything transformational. What he did at Sybase was truly transformational.”

Llamas says today’s BlackBerry is a radically different place compared to the pre-Chen era.

“There are some big differences from what you see more than a year ago to where Mr. Chen is now,” he said in an interview. “Having said that, have they turned the corner? Not yet. They haven’t bottomed out. I like the moves that he’s making, but there’s still some bleeding left to stanch.”

Llamas says his contacts within BlackBerry have been telling him they “have a new leader, and clear direction, and they feel positive about that.”

Gruia says Chen’s decision to target corporate buyers was a shrewd move, and it’s helping ease the internal strain as employees grappled with ongoing layoffs and worsening organizational performance.

“They’re going back to their origins and the hope is they can find that nirvana that they once had,” he said. “Make no mistake, there will be turbulence, but that’s not something Chen can control. A lot of it is market perception. Still, I think going back to their roots was the right move. We’ll see if it pans out.”

Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own. carmilevy@yahoo.ca