The troubled phone maker BlackBerry (BBRY, Financial) has undergone huge restructurings in the past few years, especially ever since John Chen took the chair of the CEO. The top executive had to make some very difficult choices while battling industry experts, analyst opinions, and most importantly the investors. John had a very clear picture in his mind of how he wanted the company to be, and he is finally seeing some progress. In an internal memo, the company recently announced that the painful restructuring process is over, finally, and now it’s time to get back to work:
"We have completed the restructuring notification process, and the workforce reduction that began three years ago is now behind us," – John Chen
The Painful, But Necessary Restructuring
The restructuring that began three years back has transformed the company in several ways. Over these years the Canadian company shrunk its employee base by as much as 60%, inviting severe controversies regarding its ability to continue as a business concern. John Chen was clear about his goal of making BlackBerry a software focused company from being hardware focused. As a result of this, John did away with several non-core assets.
BlackBerry also entered into multiple partnerships that would help make the company’s manufacturing and supply chain more effective and efficient. All these moves required huge funding and John managed to gather cash by selling assets, and even its Canada based headquarter that it proudly owned. There were even rumors about the company going bankrupt. The company had to sacrifice a lot to reach where it is today. The latest earnings release of the company had shocked many as it reported better than anticipated figures, only to testify to the fact that John’s moves are working.
Now that the restructuring is over, John and all employees of BlackBerry can take a breath of relief. Post all these changes, Chen is confident that he has the right organization in place that will help to achieve his business targets.
Looking Forward
“More importantly, barring any unexpected downturns in the market, we will be adding headcount in certain areas such as product development, sales and customer service, beginning in modest numbers," – John Chen
This is what Chen mentioned in the internal memo, and this clearly points at the expansion and recruitment plans of the company. One of the main aims of the company is to book positive cash flows and for this the company needs to invest in things that will provide future growth. Automatically, product development becomes crucial. BlackBerry is bringing back age old signature features in its handsets since Chen feels those are what had contributed to the phone maker’s success. The latest BlackBerry Passport and BlackBerry Classic will offer its users all modern features, and along with that will offer the convenience that BlackBerry was once famous for.
The restructuring has also helped the company become leaner and agile, with much improved business focus. John is steering the company to become a major player in the software security and encryption space. Recently the company announced its plans to acquire a German anti-eavesdropping software maker, Secusmart. Through this new partnership, the company expects to make its offerings better suited for high-profile government organizations and corporates. Secusmart’s capabilities will add greatly to the BB handset security features, pulling up the devices among the ranks of most secured hand-held devices on the planet.
Few months back, BlackBerry had lost a few US government contracts to Apple (AAPL, Financial). But, after this acquisition, the company might win back some of the lost customers and also attract new ones. Again, this is not the end to BlackBerry’s acquisition plans. The management has expressed its desire for some more inorganic growth if suitable business opportunities come across.
Departing Thoughts
BlackBerry’s progress didn’t come as a surprise to anyone. Analysts and industry experts following the stock were anticipating the restructuring to get over sometime soon. Now that all the changes that were essential are a thing of the past, the company can look forward to new synergies and efficient functioning, leading to a better and a stronger security solution provider.
