BlackBerry taps former Sybase chief as interim CEO; analysts like the move

John Chen plans to focus on business model transformation

BlackBerry's appointment Monday of former Sybase CEO John Chen as its next executive board chairman and interim CEO could be the best news in months for the struggling smartphone company.

Chen is seen as someone who can give business customers more confidence in BlackBerry, analysts said.

"Chen is a no-nonsense CEO who will hold people accountable and bring either new growth to BlackBerry or position it to be acquired at a higher premium than it currently can demand," said Jack Gold, an analyst at J. Gold Associates. "I see this as a very positive step."

But Chen's appointment came amid a series of related announcements today by BlackBerry, including the resignation of current CEO Thorsten Heins.

BlackBerry also said in a statement that it has ended the restructuring review it started in August, which means that a preliminary deal by Fairfax Financial Holdings to buy BlackBerry for $4.7 billion and take it private won't happen. Analysts interpreted the move to mean that Fairfax failed to get financing for the deal.

Instead, Fairfax and other unnamed investors are buying $1 billion in BlackBerry debt at the equivalent of $10 per common share, which represents about 16% of the outstanding shares of BlackBerry.

Because that $1 billion is enough to buy 16% of BlackBerry, Gold reasoned that BlackBerry's market value is fully $6.25 billion -- well above some recent estimates, but less than the combined value if all parts of the company were sold off separately.

Gold said some of the partners with Fairfax could include other potential bidders for BlackBerry named in recent press reports and official documents, including founders Mike Lazaridis and Doug Fregin.

Instead of coming up with $4.7 billion for an outright purchase, Fairfax is now providing $250 million of the $1 billion debt buy, which is expected to close in two weeks.

Monday's announcements come five weeks after BlackBerry announced it would take nearly $1 billion in charges on unsold smartphones, including the Z10, and planned to lay off 4,500 workers.

Despite the negative news surrounding the company, BlackBerry has said it has $3 billion in cash, so it wasn't immediately clear why a $1 billion infusion matters, unless debts are mounting faster than reported. BlackBerry could be moving ahead with the $1 billion debt purchase to prevent other investors from making bids, Gold said.

Fairfax already owns 10% of BlackBerry and its CEO, Prem Watsa, will become lead director and chairman of the BlackBerry compensation, nomination and governance committee, BlackBerry said Monday.

A potentially bigger question in Monday's developments is how BlackBerry customers should view future product support from BlackBerry.

BlackBerry issued an email statement to Computerworld on Monday saying it is carrying on with current plans to roll out the Z30 and to support other BlackBerry 10 devices, following up on a series of recent statements affirming its customer support.

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