BlackBerry’s CEO Thorsten Heins is out, as BlackBerry finds a billion dollars for life support. Where to now?
BlackBerry will not be sold, at least for now, and it will have a new CEO. The company’s executive committee had been trying to sell the business, but by yesterday’s deadline no buyer had emerged.
Instead, the company has received a US$1 billion dollar injection from a private placement led by its largest investor, Fairfax Financial Holdings. Fairfax, led by ‘Canada’s Warren Buffett’ Prem Watsa, had been trying to put together a package to buy the company outright, but couldn’t raise the US$4.7 billion that would have needed.
Maybe he will be able to find the money later – the company’s share price, plunged on the news. Shares closed at US$6.67, down more than 14% on the day. Its market cap is now just US$3.5 billion, down from US$40 billion just three years ago.
As part of the deal CEO Thorsten Heins is out, after less than two years in the job. He must be seen as a scapegoat for the company’s earlier lack of vision. Heins joined BlackBerry from Siemens 2007 as head of engineering, and then COO, before being appointed CEO in January 2012. He is too closely identified with the past, and has been asked to leave.
New CEO will be Hong Kong born John S Chen, who will also be executive chairman. He is best known as the former CEO of database company Sybase, and is a senior advisor to private equity company Silver Lake. Sybase, long a rival to Oracle, was sold to SAP in 2010. BlackBerry says he will be interim CEO until a permanent replacement for Heins can be found.
BlackBerry has presented the changes as a new beginning. “Today’s announcement marks the conclusion of the review of strategic alternatives previously announced on 12 August 2013,” said chair Barbara Stymiest. “It represents a significant vote of confidence in BlackBerry and its future by this group of preeminent, long-term investors.
“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 favourable 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.”
Chen has few illusions about the job ahead. “I am pleased to join a company with as much potential as BlackBerry,” he said. “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 transformation for the benefit of all of its constituencies, including its customers, shareholders and employees.”
BlackBerry might say it’s a good outcome, but it will do little to blow away the cloud of uncertainty that hangs over its future. It indicates that BlackBerry was unable to find anyone willing to buy the company outright, and that no potential purchaser was able to raise the money to do so.
From the statements the company is making, it seems determined to trade its way back to profitability, in a market where competition from Apple, Android and now Microsoft/Nokia is stronger than ever. It wasn’t able to do it under Heins, despite introducing impressive new products, and there is little reason to believe anything has changed.
There is no guarantee about anything. Prem Watsa has a reputation as a very savvy investor, and Steven Chen knows his stuff, but no matter what they do probably the best that BlackBerry and its long-suffering investors can hope for is that they will be able to salvage something from what has become something of a hi-tech train wreck.
It’s not a new beginning, as Blackberry would have us believe. But nor is it the end. The saga continues.
Source :- Itwire