New BlackBerry chief won't scrap smartphone unit; will 'rebuild' company

Besides patents, intellectual property, and an enterprise data network, what else is there at the struggling Canadian smartphone firm? John Chen thinks a lot more.
Written by Zack Whittaker, Contributor
BlackBerry's flagship Z10: a massive thorn in the side of the smartphone maker
Image: CNET

BlackBerry is not scrapping its smartphone unit, despite abysmal recent quarterly sales, according to the company's incoming chief executive.

Former Sybase boss John Chen, who will be replacing Thorsten Heins as the company's lead, confirmed in an interview with the Reuters news agency that he is "doing this for the long term," despite the company's struggling financial position and a failed attempt to rescue the company with private investment.

Describing the business as having "enough ingredients to build a long-term sustainable business," he cited his past experience at the enterprise technology giant, calling BlackBerry's potential turnaround as seeing "the same movie before."

On Monday, after months of trying to find a buyer for the company, investment firm Fairfax Financial, which already put forward its intent to buy the firm for $4.7 billion, shuffled the top positions at the company in order to steer the sinking ship into a profitable port. 

Fairfax said it concluded the search for "strategic alternatives," which included selling the company to a suitable buyer.

The private investment firm said it will attempt to raise about $1 billion in efforts to stabilize the company's dwindling cash position.

Justifying the plan to sell $250 million of debentures, Chen said the firm did the "due diligence," noting that a buyout with a high-yield debt and high interest rates was "not appropriate for this company." 

Despite losing about $500 million in cash during its fiscal third-quarter, BlackBerry has no long-term debt to its name.

The Z10 left the smartphone maker reeling after fiscal second-quarter earnings in late September, which forced the company to swallow a near-$1 billion loss as a result of the failed all-touch BlackBerry Z10.

The company sold just 5.9 million BlackBerry devices during the three-month period. By comparison, Apple sold nine million iPhones during the first three days of sales.

Looking ahead, Chen sees at least six quarters — about one-and-a-half years, pegging in at mid-2015 — for a turnaround. He expects to further shuffle the company's executive team, and bring in "new faces" in order to help change the expected fate of the Canadian giant.

In concluding comments, Chen told Reuters he was "going to rebuild this company."

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