BlackBerry's Turnaround Is All About CEO John Chen -- and He's Just Getting Started

NEW YORK (TheStreet) -- When I highlighted BlackBerry's (BBRY) improving fundamentals yesterday in "BlackBerry Financials Continue to Improve; Shorts Run for Cover," I focused on Asia-Pacific handset sales and several key numbers I found material in the company's earnings release.

I didn't dedicate enough time on the man who is leading the ship out of the fog: CEO John Chen.

It's old news that BlackBerry was king of smartphones before Apple's (AAPL) iPhone and Google's (GOOG) Android-based devices hobbled the company. As an investor considering the bull thesis, understanding why Apple, Google, Samsung (SSNLF), and others displaced BlackBerry is paramount to fully appreciate BlackBerry's potential.

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Natural disasters, supply chain disruptions, and labor disputes didn't bring BlackBerry to its knees.

No, it was the lack of leadership and understanding that tech and time wait for no one. Allowing the release of a half-baked Playbook tablet and over a year delay for a moderately novel Z10 smartphone -- all while Apple, Samsung, Nokia (NOK) capture market share -- falls squarely on the CEO's shoulders. Well, in BlackBerry's case, twin CEOs.

First the company had a failed reboot with Thorsten Heins and his highly incentivized "sell the company quickly" pay package.

Then, the board of directors made the best decision in what must feel like far too long for shareholders. It hired John Chen.

BBRY Net Income (Quarterly) Chart

This isn't Chen's first rodeo. He took the reins at Sybase in 1998, when it was on the edge of closing its doors for good. Sybase lost money for four years in a row, and research firm Gartner gave Sybase a 30% chance of survival. That's much worse than BlackBerry's current situation.

Fast forward about 12 years to 2010, and Sybase was generating over $13 billion a year in revenue. Shareholders were further rewarded when the company was bought by SAP (SAP) for $5.8 billion.

BlackBerry enjoys the advantages of Chen's previous experience and better financial standing.

So is it that simple?

Well, Morningstar questions BlackBerry's ability to return to profitability, but does so based on the challenges it faces with competition against Apple and Google's Android-based products.

That's a mistake. 

In the world of tech, the landscape changes so rapidly and consistently that the only thing you can count on is the leadership.

Apple started and flourished under Steve Jobs' vision. He left, and the company came so close to failing that Microsoft (MSFT) invested in the company out of fear that government regulators would declare Bill Gates' company a monopoly. Once Steve Jobs returned, the company shot straight up, never looking back, and leaving previous shareholders who sold wondering why they didn't hang on for the ride.

Naysayers don't understand this. They don't get that it isn't about the products sold yesterday. It's about the direction the company is taking for tomorrow. Reviewing the financial results last quarter and comparing them to last year is a useless exercise. Changing the CEO removes the ability to make reliable comparisons.

Chen's reputation is on the line. If he says the company will return to breakeven within a year, you should believe him. There isn't a financial metric that can disprove him.

I don't know how far BlackBerry's shares will rise, but I do know there are a lot of people that wished they didn't sell their Apple shares at the first sign of light at the end of the tunnel.

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At the time of publication, Weinstein had no positions in securities mentioned.


This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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