BlackBerry Shareholder Angst in Six Questions

BlackBerry Chief Executive Officer Thorsten Heins faced shareholders on Tuesday—not exactly a pleasant task, given that the company’s steady, years-long decline was  punctuated by a vertiginous collapse following the company’s disappointing earnings last month. The event began with a bit of deck-chair shuffling as shareholders approved a change in the company’s official name, from Research in Motion to BlackBerry. 

Then Heins gave an ambitious, if vague, vision for BlackBerry’s future: “We are not a devices company,” he insisted, predicting that the company’s traditional strength—security—would give it an edge in the market for connected cars, medical devices, and the broader Internet of Things. BlackBerry Messenger, meanwhile, would become a mobile social network, Heins declared, and sales of the company’s smartphones would improve as word of its well-regarded operating system spreads.

Just be patient, the chief executive pleaded, and wait for success to come at the end of BlackBerry’s three-stage rebuilding plan. For now, the company is starting phase two by pouring money into growth. This investment stage, as Heins seems to understand, won’t necessarily appeal to Wall Street investors with their lust for short-term profit—a problem he mentioned several times to shareholders, acknowledging how hard it will be for everyone. Then he opened the floor to people who have been losing a lot of money by holding onto his company’s stock.

Here are some questions Heins faced, prefaced by a reminder that the person asking, in each instance, is likely a small-time investor who probably can’t afford to lose money forever.

Should BlackBerry be broken up? The first shareholder to ask a question wondered if it might make sense to split BlackBerry into companies specializing in hardware, software services, and patents. Hey, maybe someone would even buy one of those individual businesses. Heins didn’t rule the possibility out. Still, he pointed out that if you want to sell your house, a good first step might be to renovate the kitchen. “Before you go into any strategic option, I think you have to create value, and the value of the company 15 months ago was way, way less than what it is today,” he said. BlackBerry won’t ignore offers, but Heins said he has to keep management focused on trying to save the company. For the remainder of the event, anyone who mentioned that he didn’t think the company should be split up was guaranteed a round of applause.

Why aren’t Wall Street, New York, and American consumers giving BlackBerry a fair shake? This event was taking place in Canada, and the proceedings had a very Canadian vibe. BlackBerry shareholders really seemed hurt that Americans don’t like the company’s phones. Heins acknowledged that U.S. consumers are a mercurial, mysterious bunch, but he tried to frame the problem in more constructive terms. The chief executive says that the concerns among investors have changed from “when is BlackBerry going to die?” to “does BlackBerry have a future?” A subtle distinction, perhaps, and debatable in any case. But Heins thinks Wall Street had its hopes too high, especially last quarter. “The expectations were written up in a way where I was sitting there saying, ‘Where was that coming from?’” he told shareholders. “And that hit us,” he added, when the numbers didn’t meet those expectations.

Why was the Z10 rollout such a disaster? Was the Q10 launch any better? (Oh, and I lost a lot of money.) They key to selling phones is getting the carriers on board, and Heins admits BlackBerry hasn’t yet persuaded carriers in the U.S. of the new devices’ value. The carriers are under pressure in the U.S. and they’re too scared to do things differently. “It is hard to convince them not to go where the pack is, but to do where the pack is going to be,” he said. “They’re under short-term pressure from their investors.” For the record, he didn’t see the launch of the new phones as a disaster.

But seriously, what’s up with Americans? Do they just love Apple so much? Do they hate Canada? And can Canada build a high tech industry? And also, I lost a lot of money. It was a patriotic crowd of shareholders gathered in Waterloo, Ontario, and Heins was happy to oblige: “I think Canada has the opportunity to be courageous, invest, and be a leader in mobile computing,” he said. And yes, the Americans are difficult.

What about India? The idea of a billion people just brought the house down. Remember, these are people who have lost a lot of money, and the Indian masses are the eternal hope of executives and shareholders searching for new consumers. Heins said that countries without wireline infrastructure were fertile markets for a wireless company and added that BlackBerry devices and services would be particularly good for businesses that need to use wireless as their basic point of connection. Nigeria has already proven to be a boon. On the other hand, Heins noted that they were selling products and services in Venezuela, but were having trouble getting the money out because of that country’s currency policies.

What happened to all those features on old BlackBerry phones that people liked but aren’t on the new BlackBerry phones? “We will not go back to the trackpad, I still get e-mails about the trackpad,” said Heins.

When all was said and done, Heins’s comments to shareholders were enough to get the company’s stock up 30¢.

BusinessWeek.com