BlackBerry is replacing its CEO and some of its board of directors, according to official PR this morning. The push to replace CEO Thorsten Heins comes as BlackBerry’s purchase deal with investor Fairfax Financial Holdings falls through, according to the release. Fairfax had until today to enter into a definitive agreement with BlackBerry, but reportedly had trouble finding the funds.
BlackBerry has now raised around $1 billion by selling convertible notes to investors, and CEO Heins will leave as part of the agreement, alongside changes to the board. Heins took over the reins at BlackBerry back in January 2012, and so leaves his tenure after a little under two years in charge. During that time, BlackBerry has launched BlackBerry 10, and also a number of new handsets including the Q10, Z10 and Z30, but that has done little to turn around the company’s ailing fortunes.
The company has been shopping itself around to potential buyers, including Intel, according to multiple reports, and assurances from Heins that it was considering all options, but this latest change in strategy suggests it couldn’t find a deal that worked for both shareholders and potential acquirers.
The new deal sees Fairfax and other institutional investors putting $1 billion U.S. in convertible debentures. Fairfax itself will acquire a $250,000 stake in those bonds, and the whole deal should come off within the next two weeks. Thosten Heins will step down when the deal closes, to be replaced by John S. Chen (previously chairman and CEO of Sybase) as interim CEO (and Executive Chairman of the Board), while the company undertakes a search for a new CEO. Fairfax CEO Prem Watsa will be named Lead Director of the Board, and board member David Kerr will depart along with Heins.
Chen arrives from Sybase, an SAP company that offers database management, analytics and data warehousing, as well as mobile app development platforms for enterprise users. He comes on as an interim CEO only according to the release, but that could provide some indication of where the company is heading with this shift in management and strategy.
BlackBerry’s official PR line around the deal seems to indicate that it’s looking at this as a way to strengthen its business to continue serving customers as before, and the company says this “marks the conclusion” of the strategic review officially launched in August 2013 by its Board of Directors. Fairfax’s Prem Watsa, then a board member, resigned at the time to avoid “potential conflicts” that could’ve arisen during the process of said review, and considering the role Fairfax has played to this point, that seems to have been a wise move.
An enterprise focus under Chen could be just what BlackBerry needs, but investors don’t seem to be that impressed with the way this has shaken out, as share price is down nearly 20 percent in pre-market trading. Heins obviously wasn’t the turnaround magician the Canadian company needed, but this shift doesn’t do much to detract from the uncertainty surrounding BlackBerry’s future.
Illustration: Bryce Durbin