Can New Executives Get BlackBerry Back on Track?
Last year, BlackBerry (NASDAQ:BBRY) fired 5,000 workers in an attempt to squeeze out $1 billion in operating costs. Now, it appears that the higher-ups are facing a similar fate as one-year incentive packages offered last July begin to expire. According to a person familiar with BlackBerry’s plans, Chief Executive Officer Thorsten Heins is ready to set tougher targets for the company that will likely result in managers with their job on the line.
Last July, one-year incentive packages were given out to help the company build and deliver the BlackBerry 10 phones and software on time. Now that those offers are expiring, it is expected that Heins will set lofty goals to try and get the company back on track. According to Bloomberg’s source, Heins will be setting goals for phone sales, subscriber growth, and product development. Failure to hit the specified goals will result in termination.
While the termination of 5,000 workers last year was expected to help the company post a profit last quarter, the strategy didn’t go as planned. BlackBerry lost $84 million last quarter after it’s Z10 touchscreen smartphone failed to make an impact with consumers. And it doesn’t stop there: the company is now projecting another loss in the current quarter.
Heins still believes cutbacks are necessary for the company, which he feels is too bloated, but he also wants to establish targets to spur growth for the new BlackBerry 10 platform. He wants to set deadlines to deliver new devices to carriers for testing — something which applies to managers, who account for 10 percent of BlackBerry’s total staff.
The Z10 was introduced in January and missed analysts’ projections by almost one million units. Low demand prompted Best Buy Co. (NYSE:BBY) to cut the price of the Z10 to $49.99 from $199.99, when coupled with a two-year contract.
On Friday, shares for BlackBerry fell 1 percent to $9.24. Since the report of the company’s missed projections was revealed on June 28, shares have fallen 36 percent.
It appears that Heins’ has already begun his mission to weed out the executive levels of the company. Last Tuesday, Richard Piasentin, the former head of BlackBerry’s U.S. sales, was let go. In the same week, executives T.A. McCann and Marc Gingras also left the company without BlackBerry saying when.