Business
BlackBerry Abandons Search For Buyer, Fires CEO
Shares of BlackBerry
plunged more than 16% on Monday after the owners abandoned plans to sell the company and fired its CEO.
According to The Tide source, BlackBerry’s potential suitors had until Monday to produce plans to buy the struggling smartphone maker. Instead, BlackBerry’s largest shareholder, Fairfax Financial, said it would invest $1 billion in the company.
Fairfax, which controls 10% of BlackBerry’s shares, announced in late September that it intended to buy the rest of the company for $4.7 billion. BlackBerry was reported to have met with several other technology companies about a buyout of all or parts of the firm since then, including Google, Cisco, SAP, Intel, Facebook, LG, Samsung and Lenovo.
BlackBerry co-founders Mike Lazaridis and Douglas Fregin also said they were interested in taking BlackBerry private a month ago in conjunction with mobile chip leader Qualcomm and private equity firm Cerberus.
The company declined to say why it didn’t accept any offers, but it’s possible that potential suitors either couldn’t come up with the funding or were no longer interested after taking a look at BlackBerry’s books. BlackBerry is a deeply troubled company with sinking sales, mounting losses and a user base that is increasingly defecting to rival smartphone makers, such as Apple and hardware companies making phones that run on Google’s Android.
It has also been hemorrhaging cash as steep writedowns and losses threatened the company’s future. BlackBerry also announced plans to lay off 4,500 employees by the end of the year in September and said last month that those job cuts will cost $400 million — four times as much as the company had previously expected.
BlackBerry also announced Monday that CEO Thorsten Heins will be leaving the company and step down from the board. Heins is due $13.25 million in severance, according to BlackBerry’s most recent proxy statement. In March, BlackBerry revised the CEO’s pay package “in recognition of Mr. Heins’ outstanding performance.”
But since then, BlackBerry released two new smartphones that were designed to turn around the company — and instead were gigantic flops. BlackBerry was forced to write down nearly $1 billion of inventory for the keyboardless Z10 smartphone.