BlackBerry Gets a new CEO and $1 Billion Instead of Getting Privatized

Not long ago, we told you about BlackBerry’s plans to go private in a $4.7 billion deal with Fairfax Financial. As it turns out, that process has fallen apart as the buyer couldn’t convince the banks that the deal was logical enough. Still, a lot has changed inside the company.

The CEO who turned BB10 into a reality and scraped BB7 OS, Thorsten Heins is gone. His void is filled by John S. Chen who will act as the company’s interim chief, while also serving as its chairman board of directors.

The company has also finalized a $1 billion deal with Fairfax Financial and a group of investors, as it seeks a way out of is recent troubles. Of course, in return of this generosity, the investors will decide what is best for the company and what needs to be scraped in order to move forward.

The first step as a part of that process is already taken, in the form of a newly-appointed CEO. Mr. John S. Chen, the new CEO, has a history and reputation of rescuing failing corporations so that’s not too bad at all.

More will follow in the future. However, quite contrary to what many people might be thinking right now, the handset division of the company won’t get axed at all.

“I know we have enough ingredients to build a long-term sustainable business,” the newly-appointed CEO said in an interview to Reuters, his first interview since the announcement. “I have done this before and seen the same movie before.”

BlackBerry in talks with Cisco, Google and SAP

Other potential buyers include Intel, LG and Samsung.

BlackBerry Ltd, on the block as its smartphone business struggles, is in talks with Cisco Systems, Google Inc and SAP about selling them all or parts of itself, several sources close to the matter said.

Such a deal would be an alternative to the preliminary agreement reached weeks ago with a group, led by BlackBerry's biggest shareholder, Fairfax Financial Holdings, to take the company private for about US$4.7 billion, a bid which has faced some skepticism because of financing questions.

The company, based in Waterloo, Ontario, has asked for preliminary expressions of interest from potential strategic buyers, which also include Intel Corp and Asian companies LG and Samsung, by early next week.

It is unclear which parties will bid, if any. But the potential technology buyers have been especially interested in BlackBerry's secure server network and patent portfolio, although doubts about the assets' value remain an issue, the sources said.

Google, Intel, Cisco, LG and SAP declined to comment. Samsung was not immediately available for comment.

Possible bidders are proceeding with caution given the uncertainty around BlackBerry, which last month reported a quarterly loss of nearly US$1 billion after taking a writedown on unsold Z10 phones.

The value of BlackBerry's patent portfolio and licensing agreements is likely to halve in the next 18 months, a company filing from this week shows, potentially limiting its attractiveness.

According to analysts, BlackBerry's assets include a shrinking yet well-regarded services business that powers its security-focused messaging system, worth US$3 billion to US$4.5 billion; a collection of patents that could be worth US$2 billion to US$3 billion; and US$3.1 billion in cash and investments.

Adding to the company's woes, it's likely to burn through almost US$2 billion of its cash pile in the next year and a half, Bernstein analyst Pierre Ferragu wrote on Thursday after studying the filing.

Private equity firms that have showed interest in BlackBerry - which also include Cerberus Capital Management - have asked the company and its advisers to provide additional financial details about its various business segments, two of the sources said. That process could take another few weeks, as BlackBerry focuses on taking bids from industry peers, the sources said.

In August, the company said it was weighing its options, which could include an outright sale, after Reuters first reported BlackBerry's board was warming up to the possibility of going private.

At that time, it formed a five-member special committee chaired by board director Timothy Dattels. Other members include Chairman Barbara Stymiest, chief executive Thorsten Heins, Richard Lynch and Bert Nordberg.

A spokesman for BlackBerry said in an emailed statement to Reuters: "The special committee, with the assistance of BlackBerry's independent financial and legal advisors, is conducting a robust and thorough review of strategic alternatives." He declined to provide further comment.

JPMorgan Chase & Co and RBC Capital Markets are advising BlackBerry. The board is being advised by Perella Weinberg Partners, the sources said. Skadden, Arps, Slate, Meagher & Flom LLP and Torys LLP are providing legal advice.