BlackBerry Ltd has no plans to shut down its loss-making handset business, incoming interim Chief Executive John Chen said on Monday, adding that the smartphone maker has sufficient resources to stage a turnaround.
“I know we have enough ingredients to build a long-term sustainable business,” Chen said in a telephone interview with Reuters. “I have done this before and seen the same movie before.”
Chen, who is replacing Thorsten Heins as CEO, performed a similar turnaround in the late 1990s at Sybase, an enterprise software and services company that was eventually acquired by SAP AG in 2010.
A year ago, private equity firm Silver Lake named Chen as one of its senior advisors. Silver Lake recently partnered with Michael Dell to take PC maker Dell Inc private.
Chen said his involvement with BlackBerry has nothing to do with his ties to Silver Lake. He also declined to comment on whether he plans to pursue licensing deals for the new BlackBerry 10 operating system with Dell or other partners.
The appointment of Chen as executive chairman and interim CEO came as BlackBerry announced on Monday that it was abandoning a plan to sell itself and opting instead to raise $1 billion via a convertible debt offering.
The plan will see BlackBerry’s largest shareholder, Fairfax Financial Holdings, buy $250 million of debentures with the rest being sold to other investors.
In late September, Fairfax had announced a tentative $9-a-share offer to take Waterloo, Ontario-based BlackBerry private. Reuters reported on Friday that Fairfax was struggling to secure financing for the $4.7 billion bid.
“We did the due diligence... and our conclusion was that a leveraged buyout with high-yield debt and at high interest rates was not appropriate for this company,” Fairfax chief Prem Watsa said in the Reuters interview on Monday. “And so we came out with the convertible debenture deal that we saw as more appropriate.”
Chen, who sees the turnaround at BlackBerry taking at least six quarters, said he plans to make changes in the company’s executive team, bringing in new faces as well as promoting some people from within the company.
“I’m doing this for the long term. I am going to rebuild this company.”
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