Stock Drops
BlackBerry shares fell as low as $6.40 in New York, sending the company’s market value below $3.5 billion. The stock was already down 35 percent this year before today’s tumble, as the company’s smartphones lost ground to Apple Inc. and Samsung Electronics Co.
Chen will become interim CEO while Waterloo, Ontario-based BlackBerry seeks a permanent replacement. The 58-year-old previously executed a comeback plan at Sybase, which was acquired by SAP AG for $5.8 billion in 2010.
The move to raise funds from convertible debentures, which can be turned into stock, underscores BlackBerry’s deteriorating cash situation. The company’s cash and short-term investments fell by almost $500 million last quarter to $2.3 billion. At that rate, the money will be gone by the end of next year. And further restructuring will only make the funds go faster, said Alexander Peterc, an analyst with Exane BNP Paribas.
BlackBerry’s latest phones got a tepid response from consumers, and even once-loyal customers such as large banks are putting off upgrading to the new software. Jabil Circuit Inc., one of BlackBerry’s top electronics suppliers, said in September that it will probably disengage from its relationship with the company in coming months. That’s raised speculation that BlackBerry will stop making phones altogether.