Blackberry Abandons Fairfax Deal, Drops Heins as CEO

by Matt Klassen on November 6, 2013

When Blackberry assembled a committee to explore strategic options this past summer I think everybody assumed that the inevitable decision of that committee would be to sell the company either in whole or in part, there just didn’t seem to be any other options. In fact over the past months few months, with Blackberry weighing serious acquisition offers and gauging the interest from the entire tech industry, it seemed a sure thing that Blackberry’s days as an independent publicly traded mobile player were over.

But after a week of tumult and turmoil things seem more uncertain now than ever before for the floundering Waterloo Company, and that’s saying something. As Monday’s deadline for acquisition offers arrived we heard the news not that Blackberry was going through with the offer from the Fairfax consortium, but that it had abandoned the deal altogether, plotting a new course that will see Blackberry attempt to raise $1 billion through the sale of convertible notes to investors.

The shocking news didn’t stop there, however, as the company announced a monumental leadership change as well, with Sybase Chief John Chen assuming the role of interim CEO, replacing Thorsten Heins, and with Chen also appointed Executive Chair of Blackberry’s Board of Directors. But can the company plot a new course in today’s mobile market? It certainly seems unlikely.

“Today’s announcement represents a significant vote of confidence in BlackBerry and its future,” 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.”

Simply put, it looks like Blackberry wasn’t kidding when it told customers it still had hope for the future, but of course that sort of optimism looks more like stalwart denial rather than a firm hand on the tiller guiding Blackberry back to greatness.

There’s no question that these turns of events have taken the entire mobile industry by surprise, as clearly the pieces seemed firmly in place for the company to be acquired and subsequently taken private by theFairfaxgroup. To see it all fall apart certainly begs the question, what happened behind the scenes? But the reality is, as always, that those details will likely never be known (at least not anytime soon).

Fairfaxisn’t completely out the picture though, as the group has agreed to buy $250 million of the “convertible debentures,” with the remainder of the $1 billion coming from other investors.

It seems, though, that investors are struggling to grasp Blackberry’s plan for the future, and certainly don’t share the company’s optimism about a fresh start. Blackberry shares plummeted upon investors hearing the news, falling 16.4% following the announcement.

But what future is there for Blackberry? It’s clear with the appointment of Chen the company is hoping to leverage his influence in the enterprise computing market, but the reality for Blackberry is the business smartphone market simply doesn’t exist anymore. As Roger Entner, principal analyst at Recon Analytics, explains, “The die-hards are counting on a corporate turnaround focusing on the business market…Unfortunately, there is no business market left — it has gotten swallowed up by the consumer market, with devices more powerful and elegant than the business segment ever offered.”

Good luck Blackberry, you’re going to need it.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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