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BlackBerry Stumbles Again
In yet another surprising turn, BlackBerry announced this morning that it is abandoning its plan to sell itself and that CEO Thorsten Heins will be stepping down and resigning his board seat as well. John Chen, former CEO of Sybase, will be taking over as interim CEO until a replacement can be found.
The company had announced in September that it had signed a letter of intent with its largest shareholder, Fairfax Holdings, to be acquired in a deal that valued the company at $4.7 billion, but apparently Fairfax has not been able to round up the cash. That deal is now off the table, though Fairfax has agreed to invest $1 billion in BlackBerry in the form of debentures that can be converted into common shares at $10 per share; their earlier bid to buy the company was for $9 per share.
Finally, W. Prem Watsa, Fairfax's chairman and CEO, will be rejoining BlackBerry's board; he had quit over the summer when BlackBerry had announced its intention to seek "strategic alternatives."
While many of us cheered Heins' appointment early on, it was primarily because he wasn't named "Lazaridis" or "Balsillie", the co-founders and co-CEOs of the company. That is the pair who famously stuck to their guns in the face of rising competition and plummeting sales, in a quixotic quest to convince people that iPhones and Androids really weren't as good as an old fashioned BlackBerry. Mike and Jim hung on for so long that in the end they handed Mr. Heins a pretty lame horse, which Heins proceeded to kick in the leg.
The company's last great hope was its next-generation devices based on the BB10 operating system that arrived over a year late and fizzled in the market. The product itself was respectable, but by that point, BlackBerry was so far out of the running it would have had to break the speed of light, regrow hair, and get the Yankees back in the playoffs to have any hope of making an impact. In the meantime the company was laying off thousands, and the executive ranks were changing by the hour.
John Chen is not a bad choice for interim CEO. He ran Sybase from 1998 until the company was acquired by SAP in 2010. At Sybase he is credited with turning the company around and introducing its Afaria product, one of the pioneering mobile device management solutions. However, no one is banking on his ability to pull off the same trick at BlackBerry, whose shares dropped almost 16% to $6.55 on this morning's news.
The $1 billion infusion will help reduce the pressure somewhat, but at some point you do have to come up with a strategy that works. The company seems to be no closer to that goal than it was when Mr. Heins took over in early 2012, and as toxic as BlackBerry has become, attracting a top-rate CEO is going to be a major challenge.
It still amazes me that as recently as 2010, BlackBerry was the premier smartphone in North America and second only to Nokia in worldwide market share. Now Nokia has been acquired by Microsoft (taking one potential BlackBerry savior out of the ball game), and BlackBerry is reeling as it attempts to come up with a way to survive.
While many have already written BlackBerry's obituary, I still see value in the company. It builds solid products, owns a worldwide brand, has over 70 million users worldwide and is still prized for its enterprise security capabilities. However, unless management can get its act together, the bumblers from Waterloo might still be able to kill this thing. In any event, BlackBerry's problems should be a lesson to anyone who steps into the tech field: Being good once holds little magic in the long run.