updated 10:07 am EST, Mon November 4, 2013
BlackBerry to drop Heins, raise $1B
BlackBerry has announced that it will drop plans to sell itself and instead replace its CEO and raise $1 billion from investors. The struggling Canadian smartphone maker will sell convertible debt notes to a group of investors, according to The Globe and Mail, with Fairfax Holdings, which initially tried to take BlackBerry private, being among those investors. CEO Thorsten Heins will be ousted after nearly two years on the job, and John S. Chen has stepped into the interim CEO position.
"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. This financing provides an immediate cash injection on terms favorable to BlackBerry, enhancing our substantial cash position. Some of the most important customers in the world rely on BlackBerry and we are implementing the changes necessary to strengthen the company and ensure we remain a strong and innovative partner for their needs."
Incoming interim CEO John Chen previously served as chairman and CEO of Sybase, Inc. Chen moved Sybase toward high-growth enterprise data management, and the firm was eventually acquired by SAP in 2010.
Heins' departure marks the end of a tenure that saw little in the way of success. BlackBerry's press release praises the outgoing CEO for his efforts in guiding the company through restructuring and the adoption of a new operating system, but Heins' time at the helm was marked by plummeting market share and, of late, massive quarterly losses. The launch of BlackBerry OS 10 and two accompanying new handsets met with lukewarm consumer interest, and BlackBerry has since been forced to write down hundreds of millions on unsold inventory.
Fairfax Financial Holdings, the largest investor in BlackBerry, announced in June a plan to take the company private for $4.7 billion. Last week, though, reports emerged that Fairfax was having trouble securing funding for the deal, as banks were not eager to put money behind the purchase of such a severely underperforming company.
BlackBerry had also been rumored to be a potential acquisition target for a number of other massive tech industry players, including SAP, Samsung, Google, and Lenovo. Qualcomm and Cerberus were also said to be considering a bid, though none of these rumors have materialized.
BlackBerry stock was down 16 percent in pre-market trading, and it opened at $6.53 In regular trading, the stock is still down about 10.3 percent.