Company

and Industry Overview:

As a global leader in mobile communications, BlackBerry transformed the mobile industry
when it began in 1999. Today, BlackBerry aims to inspire the success of millions of consumers
around the world by continuously pushing the confines of mobile experiences and expertise.
Founded in 1984 and based in Waterloo, Ontario, BlackBerry operates offices in North America,
Europe, Asia Pacific and Latin America. The company trades under the ticker symbols "BB" on the
Toronto Stock Exchange and "BBRY" on the NASDAQ.
In the early years, BlackBerry led the smart phone market solely on its own, with little to no
competition. With a large increase in mobile communications and a higher demand for smart
phone technology, there is currently much competition in the market, putting BlackBerry in
greater financial trouble. Sales have dropped drastically since the introduction of the newly
developed smart phones built by Nokia, Samsung and LG. However, many of these competing
companies depend heavily on other organizations, such as Microsoft and Google, to develop the
operating systems for their smart phones. By contrast, BlackBerry constructs its own operating
system, but, unfortunately, is not the only company to do so. Apple has done tremendous financial
damage to the drop in BlackBerry sales over the last few years with its strongly targeted
marketing campaigns and efficient smart phone products.
Situation Overview:
On Wednesday, November 19, 2014, BlackBerry shares in New York slipped after a
downgrade by financial investor Morgan Stanley. Without a week gone by since BlackBerrys
recent 17-month high, the company has fallen. Over the past year and a half, BlackBerry has risen
up against Samsung Electronics Co. for mobile security and, most recently, the launch of its newest
technology software, BES 12, on November 13. The company has planned to increase target

revenue by $500-million from software sales and additional $100-million from BBM services
annually by the next budgetary year. However, with the sudden drop in shares, it will be difficult
to convince an estimated 8 to 10 million paying enterprise consumers, as well as 1 to 2 million
messaging subscriber consumers, that BlackBerrys success is on the rise.
Business Impact:

The stock numbers were affected quite heavily with the sudden slip in BlackBerry shares. On

Wednesday, the stocks were down to $10.10 US from $10.76 on Tuesday. The shares closed at
$10.19, resulting in a 5.30 per cent decrease overall on Wednesday, followed by another drop on
Thursday, leaving the stock price at $10.05. The unexpected drop in stock price, came as a
surprise to many after the shares had risen over 7 per cent to $12.06 less than a week before,
marking its highest close during the recent launch of BES 12 since June 2013.
Challenges:
BlackBerry continues to face many long-term financial challenges alongside its most current
issue. An abrupt drop in shares, adds further skepticism among consumers, who are trying to
maintain trust in the company and who have high expectations for success. BlackBerry did not
have a successful second quarter, as its results for revenue were down to $916-million from the
previous $966-million, back in May 2014. Although these challenges have extended into a smaller
than expected loss of $0.02 per share in the third quarter, it has been exceptionally difficult for
BlackBerry to sell new smart-phone and software products in the market. With the high level of
competition in the mobile communications industry, it is exceptionally difficult to sell new
products to existing customers, while trying to regain the trust of lost consumers.
Media Coverage:

The tone of the media coverage and social media commentary regarding the sudden drop in

BlackBerry shares was negative. Due to multiple accounts of previous challenges BlackBerry has
endured over the past few years, there were many biases formed particularly by anti-BlackBerry
users. In an attempt to offer the best financial services to business clients, James Faucette, a
financial analyst at Morgan Stanley, said, We are skeptical that BlackBerry will be able to achieve
that level of success, particularly with a new product platform, new pricing, new go-to market
strategy, and with a still very damaged brand. After the story broke, twitter was used as a
response forum where many individuals made comments such as BlackBerry has unrealistic
expectations and questioned, Are there other areas where BlackBerry could grow?
Who Broke the Story Initially?

The Globe and Mail published BlackBerrys story first around 1:02 p.m. on Wednesday,

followed by the Proactive Investors USA & Canada blog and the Financial Post, later in the day.
Financial Impact:

With competing international mobile messaging industry apps, such as WhatsApp and

Snapchat, BlackBerry could have a hard time resurfacing the BBM software to gain revenue from
new and existing customers. The sudden drop in stocks may persuade consumers that BlackBerry
is not capable of providing consistent business deliverables through its current software. This
issue could become even more problematic, as consumers could potentially fail to embrace the
new Passport or the soon to be released Classic. An issue like this could have a negative financial
impact on the company, if there is no increase in sales revenue overall.
Issues Management Tool:
Audience

Expected Reaction

What will they ask?

What do we say to them?

Broader Implications

Business
stakeholders

With the unexpected slip

in shares, BlackBerry has
let us down. As business
leaders it is essential that

How are you going to be able

to aid us in finding new ways to
improve our productivity? Is
BlackBerry capable of being

At BlackBerry we are focused on

meeting the needs of business
professionals who are
productivity-driven and aim for a

The brand value could decrease, as

fewer people may invest in the
company after the slip in shares.

Brand switchers

The media

we can build trust in a

communications company
that can provide us with
the necessary tools to help
us be more in control,
deliver greater impact and
gain increased success
within our industry.

the go-to-brand when looking

for new ways to get things done
as efficiently as possible i.e. the
completion of job tasks?

BlackBerrys drop in
shares comes as no
surprise, considering the
high level of competition
it is up against. It would
be wise for us to take our
money elsewhere, as it
will be better invested into
a company that is on the
rise.
BlackBerry continues to
live up to its reputation as
a damaged brand. As
revenue continues to drop
by more than 10 per cent
each quarter, there is little
hope for the mobile
communications brand.

How does BlackBerry plan on

convincing customers that its
brand is better? What will you
offer us to come back to
BlackBerry?

If financial business advisors

such as Morgan Stanley can
heavily influence the fall in
BlackBerry shares, how does
BlackBerry plan to keep its
target business users invested
in the company?

level of success. With the new

Blackberry Passport and
upcoming Classic, our goal is to
empower business users with
mobile and software solutions
that enable them to work better
and achieve more, as efficiently as
possible.

With the new release of the
BlackBerry Passport and soon to be
released, Classic, BlackBerry is
offering our brand-switching
customers, $600 compensation to
return to the BlackBerry brand. We
are committed to our loyal
customers and want to ensure that
the best mobile software is always
at your fingertips.
BlackBerry plans to provide
consumers with tools that
demonstrate effective results. Our
newest software has already made a
large impact in the ways consumers
conduct business, communicate
with friends and family and provide
productivity in the work place.

Sales will potentially drop, as fewer

people may be interested in the
product after the slip in shares.

There is a chance for employee

turnover should the company not
recover from the sudden drop in
shares.

Q&A:
1.

What happened?

Morgan Stanley financial analyst, James Faucette, reported that BlackBerry CEO John Chen, is too
optimistic about the future success of the company. Faucette set a $7 price target on the
BlackBerry stock, followed by a drastic drop in shares Wednesday morning.
2.

Who is responsible?

Faucettes report was based on the fact that investors are measuring the stocks due to Chens
continued messaging, regarding the companys plan to generate millions of dollars in new
revenue, by budgetary year 2016. Chen is held accountable for such a high-leveled prediction for
success.
3.

Who is affected/ hurt?

Stakeholders who invest their money into the company and purchase stocks are heavily affected
by this incident. Consumers who invest BlackBerry products are also affected as they may choose
to invest in competing industries that are more secure on a financial front.
4.

Could this have been prevented?

This issue could have been prevented had Mr. Chen been more cautious in his statement about
company revenue expectations for budgetary year 2016. However, shares do fluctuate based on a
variety of contributing factors, therefore it would be beneficial to monitor these factors to help
prevent a drastic slip from happening again.
5.

What are you doing about it now?

With the intention of gaining back, lost stakeholders and adding value back into the company
stocks, BlackBerry is offering iPhone users as much as $600 to switch to a BlackBerry Passport
phone. This new tactic is aimed to provide stakeholders with the reassurance that BlackBerry is
still a global leader in mobile communications.
6.

What are you doing to prevent this from happening again?

All statements made in regards to revenue growth in particular, are estimated bi-yearly, based on
previous results, expectations and financial targets. BlackBerry plans to monitor these factors that
heavily contributed to the drop in shares and will continue to monitor them with the intention of
preventing these drastic measures from happening again.
PR Recommendations:
It would be advisable for Mr. Chen to follow the three pillars of ethics in public relations to help
protect the reputation of BlackBerry and maintain consumer trust.

1.

Honesty & Accuracy: A news conference could be held where Mr. Chen would address the

honest statement that he made regarding the revenue expectations for 2016. This would clarify to
stakeholders that the implications made were accurate target estimates, not promises.
2.

Responsiveness: Mr. Chen should be willing to take media calls and return requests to build

trusting relationships, so that stakeholders receive answers to their questions. A news release
could be sent out highlighting BlackBerrys key message: BlackBerry aims to inspire the success of
millions of consumers around the world by continuously pushing the confines of mobile
experiences and expertise.
3.

Respect: To show a sign of respect and gratitude for their continuous loyalty, Mr. Chen could

send out complimentary BlackBerry Passports to all existing BlackBerry customers. Mr. Chen
should also aim to be as open and transparent as possible in order to respect the medias role and
public responsibility to inform, question and state the truth.