“I assure you that every employee in BlackBerry understands the level of commitment and work that is needed to get us into the next stage of our transformation”.
Let me start recapping what Blackberry accomplished in the past year during the first stage of their transition, which took the company from losses and burning cash at the start of the year to a sound liquidity position in the fourth quarter at the end of that very fiscal year.
Changes last year started at the top, as Blackberry implemented significant changes at the Board level, adding three outside members with extensive mobile communications industry and business experience and also made senior management changes in BlackBerry.
They hired a new Chief Marketing Officer, a new Chief Operating Officer, a new Chief Legal Officer, and a new Executive Vice President to lead Global Human Resources Group and Department; all of them have extensive international experience in the mobile communications industry. This new executive team responded quickly to focusing on delivering strong BlackBerry 10 platform to the market and implementing personnel changes throughout the global organization, reducing layers of management and reducing complexity in Blackberry.
Promoting a high-performance culture throughout the entire organization has been a high-priority of Thorsten Heins, CEO of Blackberry throughout the first year. “We know who BlackBerry is and we know it’s driven by its people and we will continue to invest in all those activities that reinvigorate this competitive culture of the company” says Thorsten.
Blackberry also implemented significant and major changes throughout the organization and significantly reduced their cost base with CORE programs and saved $1 billion within one year. They launched the program actually at the start of the year and achieved their savings target of full quarter ahead of the schedule. Not only did the benefits from this cost reduction program show up in terms of better financial results, but they also put Blackberry in a position to reinvest in the new platform in this coming year.
Additionally, the CORE program helped also to create a new attitude and a new culture shift in the company where teams continually look at how to innovate faster but also how to do things much more efficiently than in the past. Collaboration between their teams and supplier base also resulted in a much more efficient supply chain. Over the past year, Blackberry moved from four manufacturing partners down to two and reduced their manufacturing sites from ten to four and also outsourced global repair operations.
Now because of all these significant changes, at present Blackberry’s costs are lower, working capital performance is strong, they see way better production yields and established a much more robust supply chain that is resulting in a much more efficient way of building products. While they’ve reduced cost and drove efficiency in the company, Blackberry has also invested significantly in this huge transformation of their application ecosystem. At launch of BlackBerry 10, they had the higher number of apps available compared to any mobile ecosystem at platform launch.
Thorsten Heins added, “We started with 70,000 global BlackBerry 10 apps at launch and as of today, we have reached a number of over 120,000. And also over the past year, we reestablished credibility with our carrier and distribution partners with the introduction of BlackBerry 10 and BES 10. While we are satisfied with the reception of BlackBerry 10 in various regions, we fully understand as the management team that we still have a way to go in the U.S. market as the most ferocious and the most competitive market in our industry”.
See Also: Blackberry Limited Three-Phase Transformation Plan and Vision
Blackberry delivered their new devices, Z10, Q10, Q5, and also delivered on BES 10 Enterprise Management Service which have been designed to give enterprise and consumers more features, more flexibility and the ability to do things smarter and faster.
Talking about financial strength, Blackberry established a strong balance sheet. Last year at this time, they had $2 billion in cash and no debt on the company. By year end, cash flow was up to $2.9 billion and this was accomplished despite incurring restructuring cost of $220 million, as well as supplying other funding commitments. BlackBerry delivered on significant change in the past year and importantly, delivered on their commitment in the areas that they said they would deliver.
“Let me be very clear while we have made all this great progress and while we are proud of what we achieved in the first phase of our transition, we are still in the midst of a major complex transition of this company” said Heins. And as you may understand like most of these major transformations of companies, progress can be volatile and it can be volatile in the short-term basis.
Thorsten Heins further added, “I assure you that every employee in BlackBerry understands the level of commitment and work that is needed to get us into the next stage of our transformation. While this year, we are all embarking on the second stage of this very transformation and it will involve additional investment and it will also involve a continued drive for efficiency throughout our organization”.