BlackBerry’s executives may be the main reason for the Canadian Smartphone maker’s downfall, according to a report by The Globe and Mail.
Once a dominant force in the Smartphone market with a stronghold among corporate users, BlackBerry has fallen from grace in recent years.
The struggling Canadian Smartphone maker’s second quarter report, released last Friday, revealed a $965-million or $1.84 a share loss.
One of the main reasons for the substantial loss is the $934-million write-down in inventory of the BlackBerry Z10, the firm’s touchscreen device launched at the beginning of the year. It was the device that BlackBerry hoped would propel the company into the third-place position in the Smartphone market behind powerhouses Samsung and Apple. Despite receiving good reviews, the company simply was not able to generate enough interest in the Z10 to entice consumers away from their iPhones and Galaxy devices.
Not everyone at the company believed the Z10 was the answer to BlackBerry’s woes, however.
The company’s co-founder and its former co-CEO Michael Lazaridis warned his fellow directors during a board meeting last year against releasing the Z10 in a market that is already flush with all-touch Smartphones.
“I get this. It’s clearly differentiated,” Lazaridis said during the meeting, pointing to a BlackBerry with the traditional keyboard.
“I don’t get this,” he added pointing to a sample of the Z10 CEO Thorsten Heins had just announced as the product BlackBerry would launch to propel the firm back to the top of the market.
While some of the directors agreed with Lazaridis, more sided with Heins.
According to The Globe and Mail, which interviewed a number of past and present company insiders, discord runs rampant at the executive and boardroom levels of the Waterloo, Ont. firm.
And it is that discord that has led not only to BlackBerry’s disappointing second quarter results, but also the announcement that the company will slash up to 40 percent of its workforce as it changes gears to focus on business customers rather than the average consumer.
The company is in such bad shape, it went up for sale this summer. It is to be acquired by Fairfax, its largest shareholder, for $4.7 billion. The letter of intent between the two companies indicates investors will receive $9 cash for each share. A definitive transaction agreement is to be finalized by Nov. 4.
Also responsible for the firm’s downward spiral, The Globe and Mail found, was a decision by Heins and Lazaridis in early 2012 to quash the move by Lazaridis’ longtime business partner and co-CEO Jim Balsillie to encourage U.S. wireless carriers to adopt BlackBerry Messenger (BBM) instant messaging service for all Smartphones in place of the short text messaging system (SMS) applications.
Balsillie left the company over the decision, convinced the company had turned its back on a major revenue stream.
The in-depth Globe and Mail report cites multiple reasons for friction at the executive level dating back to 2007. To read the Globe and Mail’s story, click here.