BlackBerry Ltd (BBRY): Put an End to This Revolving Door … NOW

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BlackBerry Ltd (BBRY) has been both a revolving door of leadership and ideas for the better part of 10 years. With its latest move, head of devices Ron Louks is leaving the company after arriving with lots of excitement from loyal BBRY enthusiasts two short years ago.

BlackBerry Ltd (BBRY): Put an End to This Revolving Door ... NOW

Unfortunately, the fact that Louks is leaving gives us little hope that Blackberry can turn its declining business around. In fact, it just reaffirms that BBRY and BlackBerry stock is running out of options.

Is BBRY Leadership Insane?

BlackBerry is notorious for treating every hire like the best in its history, and every shift in operating approach as the answer to all of its ongoing problems. After years of witnessing this behavior, I am convinced that BBRY is either delusional or desperate, or maybe a little of both.

That said, Chen entered Blackberry with a fresh vision and a history of turning around companies that hit hard times. Since Chen came on board, he emphasized software and services as BlackBerry’s business of the future. While the performance has been decent, sales have been mostly disappointing.

Unfortunately for Chen, success in software and sales usually goes hand-in-hand with hardware. After all, businesses and consumers who use BBRY hardware are more likely to use its software and services.

Therefore, Chen made hires like Louks and embarked on a plan to combine BBRY hardware with Android operating systems. Many investors — even BlackBerry stock bears — thought it was a brilliant idea. Everyone also knew this was a move of desperation after BlackBerry had continuously failed with new operating system launches.

Unfortunately, Priv sales have since dwindled, leaving very little to get excited about. As a result, BBRY has done what it does best: It has come up with a new company saving plan, kicked past management to the curb and hired new executives with “incredible” track records of success.

In this instance, I am talking about the hiring of Alex Thurber, who will obviously take Louks’s spot. Thurber was the head of worldwide sales at WatchGuard Technologies, and under his lead sales went from declines to six straight quarters of year-over-year growth.

Given Thurber’s “track record”, it is obvious that he will do the same at Blackberry. Furthermore, we should all buy Chen’s excuse that high-end smartphones are a well penetrated marketplace, and that a focus on the low-to-middle end of the sales channel will have much different results, versus the Priv sales disappointment.

That said, the definition of insanity is doing the same thing over and over and expecting different results. BBRY may shuffle CEOs, executives and heads of certain divisions, along with constant reinventions of its operating strategy, but at the end of the day, Blackberry continues to throw spaghetti on the wall in hopes that something will stick.

In almost 10 years, nothing has stuck. Therefore, the firing of Louks won’t matter, the hiring and promotion of Thurber is of little relevance and an emphasis on the low and middle end smartphone market is sure to fail.

Bottom Line for Blackberry Stock

Instead of trying to relive the glory days, it is clear that past BlackBerry users are not coming back. Sure, BBRY may convert some Samsung (SSNLF) or LG users over time to its Android hardware, but the iPhone was the death of the old BlackBerry. However, that does not mean it can’t be a legitimate company that creates value for shareholders.

Software and services are growing triple digits with over $150 million in quarterly revenue and the company has proven it can ship 2 to 2.5 million devices per year. Blackberry should accept that this is its reality, and while it may never top $2 billion in annual revenue, it can focus on cost control to become highly profitable.

With a market capitalization of $3.5 billion and $2.6 billion in cash and investments, BBRY stock could perform very well if management would provide clarity about the future, use cash to buy back stock and pay dividends and focus on profitability.

Unfortunately, the board is too stuck on reliving the past, and will settle for nothing less. As a result, BBRY stock will continue to deteriorate and you can rest assured that Blackberry will continue to change management, executives and strategy for years to come.

Hopefully, someone, somewhere down the BBRY line figures out this revolving door is nothing more than insanity, and will never save BlackBerry stock.

As of this writing, Brian Nichols did not own any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/05/bbry-stock-blackberry-revolving-door/.

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