BlackBerry CEO Chen Faces Ghosts From Company’s Halcyon Days

BlackBerry Ltd. Chief Executive Officer John Chen has cut costs and started posting profits in his year and a half at the helm. But he’s still dealing with ghosts from the halcyon days.

Chen said his biggest challenge is convincing his employees that BlackBerry’s days as a smartphone-focused company are over.

“It’s a hard cultural shift in our company because we used to be the king of the hill,” he said at a May 5 event in the company’s hometown of Waterloo, Ontario. When Chen joined, the culture inside the firm was “everything has to be BlackBerry, if you’re not using a BlackBerry then you’re not very intelligent,” he said.

Chen’s turnaround plan centers on expanding BlackBerry’s software business to diversify away from handsets, whose global market share has dropped to less than 1 percent. He’s building new applications for other companies’ smartphones and envisions a future where BlackBerry security software keeps billions of connected devices -- from cars to pacemakers -- safe from hackers.

Trying to persuade customers that the company has changed isn’t easy either.

“One of the biggest things that I’m working and struggling with, that everybody here can help, is our reputation,” he told a crowd of 400 Waterloo business owners and community members.

About 2,200 enterprise customers bought BlackBerry software last quarter, he said. “More and more are doing it, but still a lot are sitting on the sidelines.”

Before Apple Inc.’s iPhone existed, BlackBerry had convinced businesspeople that they couldn’t live without mobile e-mail. “Crackberries” were a status symbol for the powerful and connected, and in 2008 one in five of the world’s mobile phones were BlackBerrys, according to researcher Gartner Inc.

As consumers flocked to the touch screens and massive application libraries offered by its competitors, BlackBerry’s global market share slumped.

‘Sea Change’

“The reason why we all grew up with BlackBerrys is because there were no other choices,” Chen said. “When the other choices started showing up I think we, collectively now, as a company, refused to believe that there was a sea change.”

The CEO took over in November 2014 after a plan to take the company private collapsed. In his previous job, he revamped business software company Sybase Inc. and sold it to SAP AG for $5.8 billion in 2010, more than six times its value at the start of his tenure.

At BlackBerry, he’s still working at reversing revenue declines. Chen said in March that sales are nearing a bottom after slumping 32 percent in the latest quarter. He’s aiming to double software sales to $500 million by next March. On the device side, Chen has unveiled three phone models -- the Leap, the Passport and the Classic -- since September and plans more this year.

“Not long ago the company was in deep, deep trouble. We are now out of trouble, in terms of financials, but we haven’t established the growth,” he said.