Just weeks after former CEO Thorsten Heins was given the boot, BlackBerry (BBRY) is kicking its chief operating and marketing officers to the curb as well. Roger Martin — a board member since 2007 — also is leaving BBRY, apparently of his own accord. So, is the housecleaning a positive for the company and battered BlackBerry stock?
Not really. It’s too late for BBRY.
BlackBerry stock was in desperate need of a managerial shakeup; of this there should be no doubt. The problem is, BBRY needed it five years ago, not today.
I want to compare BlackBerry management to that of Nokia (NOK), the Finnish mobile communications company that was, for most of the 1990s and 2000s, the largest and best-respected mobile phone maker on the planet.
After Apple (AAPL) launched the iPhone in 2007, both BBRY and NOK found themselves on the wrong side of the smartphone revolution. Nokia’s Symbian, once the dominant “smartphone” platform (I use this term loosely), found itself in terminal decline. BlackBerry, which had a better enterprise presence, took a little longer to feel the pinch.
But to any management team that wasn’t delusional or in denial, the handwriting would have been very clearly on the wall: Apple and Google (GOOG) were reinventing the smartphone market and leaving all others behind.
Faced with a slow but inevitable decline, Nokia CEO Stephen Elop responded with his now-famous “burning platform” memo. He scrapped Symbian and formed a partnership with Microsoft (MSFT) that would see Nokia adopt the Windows Phone operating system.
The jury still is out as to whether that was the right decision. The Microsoft partnership guaranteed that Nokia would have the financial backing it needed to stay afloat. But it ultimately still resulted in Nokia leaving the handset business. Microsoft has since purchased the Nokia division that makes the handsets, and Elop has since resigned from his post as CEO.
Still, had Elop not done what he did, Nokia would have suffered a slow bleed and most likely would have found itself in BlackBerry’s shoes today: slowly dying and waiting for the vultures to pick the company clean of any sellable assets.
BBRY never had a “burning platform” moment. Instead, BlackBerry stuck to a stubborn belief that their core customers would stick with them through thick and thin despite all evidence to the contrary.
Looking back at BlackBerry, there is no reason why management couldn’t have done what Elop did. It could have adopted Windows Phone. Or better, given its ability to be tailored and customized to each manufacturer, it could have adopted Android. Instead, BBRY bet it all on QNX, which might have made it a viable competitor … had BlackBerry released it three years earlier.
Returning to the management shuffle, BlackBerry stock is up just more than 1% in early Monday trading. Don’t get sucked in here. “Success” by the new management team will be measured by the prices they can get in shopping around the assets that BBRY still has, such as its patent portfolio.
Could BlackBerry have a life after handsets as a device management and security company? Yes, hypothetically. But is that something you want to bet on right now?
My advice is to walk away from BlackBerry stock. At some point, a corporate raider might make a fortune selling the company for spare parts. But we’re not to that point yet, and management has a lot more value to destroy in the meantime.
Charles Lewis Sizemore, CFA, is the chief investment officer of the investment firm Sizemore Capital Management. As of this writing, he was long MSFT.