Blackberry CEO John Chen stands in front of an autonomous vehicle at the BlackBerry QNX headquarters in Ottawa, in February 2019.CHRIS WATTIE/Reuters
John Chen is in active conversations with the BlackBerry Ltd. board over his future with the company as his contract draws to a close next month, the CEO of the Canadian technology pioneer said Tuesday.
“There is a conversation there,” Mr. Chen said at an investor briefing during a day-long summit in New York. “We’ll probably have the result soon.” Mr. Chen was appointed to lead BlackBerry in November, 2013, to replace short-lived predecessor Thorsten Heins, who had taken over in early 2012 from long-time co-CEOs Jim Balsillie and Mike Lazaridis.
Mr. Chen said he didn’t know whether he would remain with BlackBerry and that the decision about his future had been left until after the board decided earlier this month to split itself in two. The company plans to spin off its profitable, fast-growing connected car, or internet of things (IOT), business into a separate public company, from its slower growing, unprofitable cybersecurity business.
“It’s now time for me and the board to sit together and say what value I add, or had I ever added any value, or what value I add going forward,” Mr. Chen said. The five-year extension to his original employment contract expires Nov. 3.
The California-based tech industry veteran made the comments during a briefing about the Waterloo, Ont.-based company’s spinout plans, which followed a strategic review advised by investment banks Morgan Stanley and Perella Weinberg Partners. Mr. Chen said that BlackBerry would likely sell 20 per cent to 30 per cent of the IOT business in an initial public offering, with a target of next June.
Mr. Chen said he’s still intent on proving convergence of the two business units can create value in the market but acknowledged that hasn’t happened yet, adding: “When you have two boards, two management teams, that may or may not happen.”
He stressed the cybersecurity business would need to prove it could succeed on its own without requiring subsidization from other parts of the company. That should be achievable by streamlining research and development spending after a period of heavy investment, he said.
“I am hoping that we have a business plan that allows us for the next fiscal year to be profitable, or at least break even” in cyber, Mr. Chen said, adding there was little reason to consider potentially selling the cyber business now while growth is weak and it is losing money. “It’s best for us to fix it” first to increase its potential value, he said.
Mr. Chen was successful in the first few years of his tenure in transitioning BlackBerry completely out of the smartphone business it had once dominated, and cutting costs while securing its future as a continuing company.
He was aided by billions of dollars in legacy high-margin service-fee revenue negotiated by his predecessors with carriers when BlackBerry hand-held devices were in hot demand, and which poured in for years as customers continued to use its aging devices.
But he has since delivered little payoff for investors. BlackBerry’s shares have languished for years – except for a brief spike when it became a “meme stock” in 2021 – and are trading at roughly the same level they were 24 years ago when its wireless e-mail device was the hottest tech gadget in the world.
Under Mr. Chen, BlackBerry had become a hodgepodge of different businesses, mostly picked up through acquisitions.
It is a provider of in-car software to connect vehicles to the internet. It also sells cybersecurity software and provides device management software used by corporations to manage the fleets of devices used by their employees. It had a lucrative business extracting payments from other companies for alleged use of its intellectual property but sold most of its legacy smartphone patents earlier this year.
The cybersecurity business has been a disappointment, delivering far less growth than expected. BlackBerry is a leader in the device management business, but it is a crowded, mature niche sector.
The company’s jewel is its connected-car business, managed out of its QNX division in Ottawa, which was picked up in a 2010 acquisition. It is expected to deliver 20-per-cent annual growth for years, far more than the cybersecurity business. Its technology is in more than 235 million cars and used by all of the world’s top 10 automakers.
But BlackBerry recently announced disappointing revenues for both divisions and cut its revenue forecast for the connected-car division to between US$225-million and US$240-million for the year, mainly because of delays in project implementation and reorganizations at some carmakers.
Strikes and other macroeconomic issues could “put a dent” in the rebound, Mr. Chen said Tuesday, though he said he still expects QNX revenue to hit a record high in its fourth quarter.