BlackBerry closes chapter on restructuring process - internal memo

TORONTO Tue Aug 5, 2014 10:52am IST

The Blackberry sign is pictured in Waterloo June 19, 2014. REUTERS/Mark Blinch/Files

The Blackberry sign is pictured in Waterloo June 19, 2014.

Credit: Reuters/Mark Blinch/Files

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TORONTO (Reuters) - BlackBerry Ltd has concluded a protracted and painful restructuring process and is back on a growth footing, according to an internal memo to all its employees viewed by Reuters.

"We have completed the restructuring notification process, and the workforce reduction that began three years ago is now behind us," said the memo from BlackBerry's Chief Executive John Chen that was sent out on Friday.

"More importantly, barring any unexpected downturns in the market, we will be adding headcount in certain areas such as product development, sales and customer service, beginning in modest numbers," said Chen, who personally thanked those that have stayed with the company through the process.

BlackBerry has shrunk its workforce by roughly 60 percent over the last three years as it attempts to reinvent itself. The company that dominated the smartphone market in its infancy has seen its sales dramatically eroded over the last four years by Apple's iPhone and a slew of rival devices powered by Google Inc's Android operating system.

Chen, who took the reins at BlackBerry roughly eight months ago, has moved rapidly to stabilize the company by selling non-core assets, partnering to make the company's manufacturing and supply chain more efficient, and raising cash via the sale of the company's extensive real estate holdings in its hometown of Waterloo, Ontario.

Chen, a well-regarded turnaround artist in the tech sector, intends to remain a competitor in the smartphone arena, but is focused on reshaping the company to build on its core strengths in areas like mobile data security and mobile device management.

In the memo, Chen told employees that he believes BlackBerry is now well on its way to recovery and that he is confident the company will meet its goal of being cash flow positive by the end of the current fiscal year.

He noted also BlackBerry, which had previously said it was trimming its workforce down to 7,000 from a peak of over 17,500 in 2011, is now in a position to make strategic acquisitions to strengthen areas that are likely to drive future revenue growth.

Last week, BlackBerry announced one such deal with a move to acquire Secusmart, a privately-held German firm specializing in voice and data encryption. The deal is expected to burnish its credentials with some of its highly security-conscious clients like government ‎agencies.

Chen, who is well known for having turned around enterprise software maker Sybase Inc in the late 1990s, told employees in the memo that he is confident BlackBerry now has the right organization and team in place to execute its business strategy.

Over the last few months, Chen has hired a number of former Sybase employees that helped engineer that turnaround before the company was sold to software giant SAP AG in 2010.

Chen stressed in the memo there was "no margin for error to complete BlackBerry's turnaround to success", and he called on employees to remain focused as the company rolls out an upgrade to its device management system and its new Passport and Classic devices this fall.

(Reporting by Euan Rocha; Editing by Ryan Woo)

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