Struggling smartphone pioneer Blackberry has annnouced that it is abandoning its efforts to find a buyer. Instead, it is banking on a major injection of cash and a new boss to get it back onto the rails.
The Canadian smartphone maker said on Monday that its largest shareholder, Fairfax Financial, had declined to purchase Blackberry outright, but would now join other investors in injecting $1 billion (741 million euros) into the business, as part of a new plan to return it to profitability. As part of the deal, Fairfax boss Prem Watsa is to be appointed to Blackberry's board of directors.
This comes just weeks after Fairfax, which owns a 10 percent stake in Blackberry, had announced a plan to take the Waterloo, Ontario-based company private. Facebook, Chinese computer maker Lenovo and investment firm Ceberus are among the other companies that considered a purchase, but decided against it.
That agreement in principle was signed just a couple of days after Blackberry had announced that it was laying off around 40 percent of its staff in a bid to right the ship.
Barbara Stymiest, the chairperson of Blackberry's board, expressed optimism about the new financing plan.
"Today's announcement represents a significant vote of confidence in Blackberry and its future by this group of preeminent, long-term investors," Stymiest said.
Change at the top
The company also announced that that Blackberry's German chief executive, Thorsten Heins had stepped down after less than two years at the helm.
Heins has been replaced on an interim basis by former Sybase chief executive John Chen, who was desribed by Watsa in glowing terms.
Watsa pointed to Chen's record of turning around Sybase, a software data management company, which was sold to SAP AG for $5.8 billion in 2010.
"He joined in 1998 and the company was going through similar problems, the stock price was down 90 percent, four years of losses, John joined them and had one of the best track records that I have seen," Watsa said.
Chen expressed confidence that he could turn Blackberry around, telling the Reuters news agency that "I have done this before and seen the same movie before."
He described Blackberry as "an iconic brand with enormous potential," but also warned that "it's going to take time, discipline and tough decisions to reclaim our success."
On Monday at least, investors didn't seem to share Chen's optimism, as shares plunged by almost 17 percent to $6.46 in afternoon trading.
pfd/dr (AP, Reuters, AFP)