Canadian handset maker BlackBerry is getting a large cash infusion -- and a new CEO. Fairfax Financial Holdings and other institutional investors are investing in the company by buying $1 billion in convertible notes.
"Today's announcement represents a significant vote of confidence in BlackBerry and its future by this group of preeminent, long-term investors," said Barbara Stymiest, Chair of BlackBerry's Board. "The BlackBerry Board conducted a thorough review of strategic alternatives and pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders.” The transaction is expected to be completed within the next two weeks.
Can Chen Turn it Around?
With this major move comes a C-suite shake up. BlackBerry CEO Thorsten Heins, who in April predicted the demise of tablets within five years and also said he was confident BlackBerry will be the “absolute leader in mobile computing” in five years, is stepping down. John Chen will take his place.
Chen previously served as the chairman and CEO of Sybase, beginning in 1998. Under Chen's leadership, Sybase was transformed from a mature technology company into a high-growth data management, data warehousing, mobility management and analytics innovator that was acquired by SAP AG in 2010.
Chen will also be appointed executive chair of BlackBerry's board of directors and, in that role, will be responsible for the company’s strategic direction, strategic relationships and organizational goals. Prem Watsa, chairman and CEO of Fairfax, will be appointed lead director and chair of the Compensation, Nomination and Governance Committee.
"I am pleased to join a company with as much potential as BlackBerry," said Chen. "BlackBerry is an iconic brand with enormous potential -- but it's going to take time, discipline and tough decisions to reclaim our success. I look forward to leading BlackBerry in its turnaround and business model transformation for the benefit of all of its constituencies, including its customers, shareholders and employees."
Will BlackBerry Survive?
We asked Jeff Kagan, an independent telecom analyst, for his take on the big news. He told us these big changes are not what the marketplace expected: BlackBerry is abandoning its plans to go private; replacing its CEO and raising $1 billion. So what does all this really mean?
“There are so many questions right now surrounding Blackberry. Blackberry tried to remake itself and so far has failed. They once led. Then when the Apple iPhone and Google Android entered the space and changed the smartphone world, Blackberry just could not keep up,” Kagan said.
“The real question is will Blackberry survive? If so, what will they look like and will they be successful? Right now there are no real answers for Blackberry. That is a very uncomfortable place to be for investors, customers, workers and partners,” he added.