Struggling smartphone maker BlackBerry has abandoned a $4.7bn (£3bn) rescue bid from its largest shareholder, fired its CEO and turned to a $1bn fundraising plan in a battle to stay afloat.  Thorsten Heins was employed as CEO to run the company back in January 2012.  He will leave with a pay off worth $22 million and be replaced by John Chen, a technology industry executive with years of experience in the field.

Blackberry CEO

The surprise move by BlackBerry was proof that it has failed in its attempt to find a buyer after a six week process.  During this time, the company has discussed deals with industry giants such as Google and Facebook.  The company has said, instead of pursuing a deal with Fairfax Financial, its 10% shareholder, it will raise $1bn in convertible bonds.  Fairfax has pledged to buy $250m worth of these bonds.  The company did not say why it was trying to raise the extra money among financial predictions that it will spend its $2bn cash pile within the next 18 months. The company’s last quarterly results showed revenues plunging and it is trying to cut costs by firing almost a quarter of its staff!

BlackBerry controlled close to 50% of the handset market in the US only 4 years ago, but its share now stands at less than 3% after it collapsed under massive competition from Samsung and Apple.   BlackBerry’s chairwoman, Barbara Stymiest, thanked Heins for his “significant accomplishments” at the company. His interim replacement, Chen, is an adviser to the private equity group Silver Lake in the recent Dell buyout. In a recent interview with Reuters, Chen said he had no plans to shut down the company’s handset business; although this is widely thought to be one of the main reasons why Blackberry is suffering a significant loss.  “I know we have enough ingredients to build a long-term sustainable business. I have done this before and seen the same movie before,” he said. “BlackBerry is an iconic brand with enormous potential – but it’s going to take time, discipline and tough decisions to reclaim our success,” Chen said.

BlackBerry shares plunged by 13% to $6.79, from $7.70 before the market opened, far below the $9 per share that Fairfax was going to offer, ahead of Monday’s bid deadline.

[Image via thestar]