The reign of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) CEO John Chen could be measured by hedge fund executives shortly, as analysts await earnings results so they can gauge a rather sharp turn in strategy under the new CEO.


BlackBerry’s Prem Watsa was behind the installment of Chen as CEO

Readers will recall previous reports in ValueWalk noted that V. Prem Watsa, V. Prem Watsa, chairman and chief executive officer of Fairfax Financial Holdings Ltd (OTCMKTS:FRFHF) (TSE:FFH), BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s largest shareholder, was behind the installment of Chen as CEO.

Chen has since decided to build upon the firm’s security infrastructure and reduce dependence on cell phone revenue.  The CEO of Waterloo, Ont.-based BlackBerry is seeking to cash in on “The Internet of Everything” craze, offering secure methods for various household devices to speak to one another.  At one time the leading smartphone maker in North America, BlackBerry witnessed phone sales tumble in the face of product delays, slow reaction to design trends and stiff competition from leading vendors, including Samsung, who adopted touch screen technology well before Blackberry.  Just last week, BlackBerry revealed an expansion of its secure near-field communication payment data platform for Canadian mobile carriers and banks.

The bench-marked Chen era

The Chen era could be partially bench-marked before the stock market opens Thursday, as the company is scheduled to report results for its fiscal first quarter ended in May. Analysts estimates expect to report a 25 cent (U.S.) per share loss as it transitions business models, versus 13 cents in red ink a year ago, on revenue of $963.93 million. That’s down 68.6 per cent from sales of $3.1 billion in the comparable period last year. Chen noted BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) was at a critical pivot point. It’s emphasis on secure software for corporate and government markets and move to lower-cost manufacturing have increased the odds of a successful turnaround, he said, expecting to be cash-flow-positive by the end of this fiscal year.

Not everyone believes in this rosy picture. “We believe the transition may be bumpy,” Maynard Um of Wells Fargo said in a report.

BlackBerry still focuses on cell phones

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) still focuses on cell phones, but has moved aggressively to reduce production costs in the face of dwindling customer revenue.  It launched the Jakarta program that is expected to boost sales with a lowered price point. Under Chen the firm inked a deal with Taiwan’s Foxconn Technology Co Ltd (TPE:2354) (OTCMKTS:FXCOF) to lower production costs and is bolstering security on it messaging software to lure enterprise customers to the new eBBM suite.  Industry observers were speculating BlackBerry is eyeing a push to customizable Android apps for consumer devices so as to more effectively compete with Samsung and Apple and to reduce the costs of developing in-house offerings, according to the report.