BlackBerry Executives Leave as CEO Rebuilds Management
BlackBerry Ltd. (BB) announced the departure of three top executives as new Chief Executive Officer John Chen shifts away from the consumer market to try to turn around the struggling smartphone maker.
Chief Financial Officer Brian Bidulka is departing after eight years at BlackBerry and will be replaced by James Yersh, who had been controller and head of compliance, the company said in a statement today. Chief Operating Officer Kristian Tear and Chief Marketing Officer Frank Boulben, who were hired under previous CEO Thorsten Heins, are both leaving.
Chen, the former CEO of Sybase Inc., took the reins at BlackBerry on Nov. 4, following a failed attempt by Fairfax Financial Holdings Ltd. (FFH) to buy the Waterloo, Ontario-based company for $4.7 billion. BlackBerry then raised $1 billion in a convertible debt sale, giving it more of a cushion as Chen formulates his comeback plan to rebuild BlackBerry as a smaller, more focused company.
“The organization was top-heavy to begin with,” said Sameet Kanade, an analyst at Jacob Securities Inc. in Toronto. “If the management team was not effective, it made sense to start with a clean slate.”
Neither Boulben nor Tear will be replaced, a sign of the company’s strategy to narrow its focus to business users after failing to attract consumers.
“We need to focus more on the enterprise, and this is where my experience comes in,” Chen said in an interview the day he joined the company.
Given that shift, eliminating the marketing chief position makes sense, Kanade said. Removing the operating chief “shows that Chen wants a more hands-on approach,” Kanade said. The move also might be a precursor to bringing some of his former Sybase colleagues over to BlackBerry, he said.
BlackBerry fell short of analysts’ expectations this year with its new flagship phone, the Z10. It wasn’t introduced in the U.S., a top market for new smartphones, until months after its debut in the U.K. and Canada. In September, BlackBerry took a charge of $934 million to write down unsold inventory and cut the number of planned models to four from six.
An ad for the Z10 during February’s Super Bowl, where a 30-second spot can cost as much as $4 million, was panned by critics such as Alexander Chernev, a Northwestern University marketing professor, for failing to highlight the device’s features.
With consumers falling out of its grasp, BlackBerry is counting on Chen’s experience to help it hold on to business customers. When Chen assumed control of Sybase in 1998, the software maker was in the midst of a restructuring, had announced plans to cut 10 percent of its workforce and was trading near a record low. In 2010, he sold Sybase to SAP AG for $5.8 billion, with the stock trading more than six times higher than at the start of his tenure.
BlackBerry was little changed at $6.25 at the close in New York. The stock has dropped 47 percent this year and is more than 95 percent below its 2008 high.
Roger Martin, a professor at the University of Toronto’s Rotman School of Management, also has resigned from the company’s board, BlackBerry said today.
Chen, who also serves as executive chairman, will give an update on the company’s new organizational structure when BlackBerry posts its fiscal third-quarter earnings on Dec. 20. It’s expected to report a loss of 42 cents a share, excluding some items, and a sales decline of 42 percent to $1.59 billion, according to a Bloomberg survey of analysts’ estimates.
“I look forward to working more directly with the talented teams of engineers and the sales and marketing teams around the world to facilitate the BlackBerry turnaround and to drive innovation,” Chen said in today’s statement.
Bidulka will get a severance package worth about $3.06 million, based on a company filing in May. Boulben, who was named as marketing chief in May 2012, will receive about $2.27 million, made up of a combination of base pay, benefits, retirement savings and options. Tear, a former executive at Sony Mobile Communications whose hiring was announced the same time as Boulben, will get $1.52 million.
Adam Emery, a spokesman for BlackBerry, declined to comment.
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