As it turns out, BlackBerry is as unattractive to investors as its phones are to its customers.
The Canadian smartphone maker announced this morning that it abandoned its high-profile auction to sell the firm, presumably because no one offered a serious enough bid. Shares in the company have plummeted more than 12% this morning.
Instead, the company announced a $1 billion capital infusion from a group of investors, led by Fairfax Financial’s Prem Watsa, who is essentially Canada’s equivalent of Warren Buffett. BlackBerry is replacing its CEO Thorsten Heins with former Sybase CEO John Chen, who will act as executive chairman and interim CEO.
The move will buy the company more time to come up with a long-term solution to turn around its flailing business. But it smacks of desperation. After all, BlackBerry is burning through cash at the moment—it lost $965 million in the last quarter alone and slashed more than one-third of its workforce after unveiling an uninspiring new line of smartphones.
Fairfax also had a $4.7 billion bid on the table that BlackBerry had accepted. The $1 billion lifeline suggests what investors had long suspected: that the Fairfax bid wasn’t fully financed and was instead designed to tease out other higher offers. Presumably, despite the slew of big tech names that were linked with the auction, no one came close to matching it. Even the Canadian government has distanced itself from chatter about a potential bailout, making the one-time tech giant a fallen national crown jewel.