Trapped in a Corner, BlackBerry is Out of Room for Errors

Posted by Knowlton Thomas

BlackBerry is banking on the hope that a new chief executive officer will turn things around at the struggling company.

We've been here before: co-CEOs Mike Lazaridis—who founded BlackBerry—and Jim Balsillie were booted out less than two years ago and Thorsten Heins took the reigns. Under his leadership, BlackBerry's share price folded in half.

Now Heins is gone and John Chen is taking over as chairman and interim CEO. What's going to be different for the smartphone maker this time?

One difference is $1 billion. That's how much money BlackBerry raised this month from a group of investors spearheaded by Prem Watsa's Fairfax Financial, the company's largest shareholder. This was the move BlackBerry made instead of selling and going private. Right or wrong, it's a move the company will have to live with long-term.

Mike Genovese, an analyst at MKM Partners, believes it was the wrong move. "It's bad for BlackBerry if they have to stay private," he argued in a recent issue Canadian Business. Going private will give BlackBerry much more freedom strategically and provide a shield against media scrutiny.

However, at this point that is extremely unlikely to happen. So what is BlackBerry to do? In short, make the most of its $1 billion cash injection, as well as the rest of its cash pile. Given the company is in the red, it's apt to burn through this cash quickly, so it doesn't have much margin for error.

"There is no more money after this," affirmed James Faucette, an analyst at Pacific Crest Securities, in Canadian Business. "They've got to make this last not just a couple of quarters, but forever, until they can turn the company around."

If they can turn the company around.

Company:
BlackBerry
Website:
http://www.blackberry.com
Location:
Waterloo, Ontario, Canada

Research In Motion (RIM), a global leader in wireless innovation, revolutionized the mobile industry with the introduction of the BlackBerry solution in 1999. Since then, BlackBerry products and services have continued to change the way millions of people around the world stay connected. With the launch of BlackBerry 10, we have re-designed, re-engineered and re-invented BlackBerry. Not only did we introduce a... more


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Knowlton Thomas

Knowlton Thomas

Knowlton is the managing editor of Techvibes. Based in Vancouver, Knowlton has been published in national publications and has also appeared on television and radio. Previously he was an editor for New Westminster weekly The Other Press and served on its board of directors. When not working, Knowlton enjoys playing tennis, hiking, and exploring weird side streets. more




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