Trapped in a Corner, BlackBerry is Out of Room for Errors

BlackBerry is banking on the hope that a new chief executive officer will turn things around at the struggling company.

We’ve been here before: co-CEOs Mike Lazaridis—who founded BlackBerry—and Jim Balsillie were booted out less than two years ago and Thorsten Heins took the reigns. Under his leadership, BlackBerry’s share price folded in half.

Now Heins is gone and John Chen is taking over as chairman and interim CEO. What’s going to be different for the smartphone maker this time?

One difference is $1 billion. That’s how much money BlackBerry raised this month from a group of investors spearheaded by Prem Watsa’s Fairfax Financial, the company’s largest shareholder. This was the move BlackBerry made instead of selling and going private. Right or wrong, it’s a move the company will have to live with long-term.

Mike Genovese, an analyst at MKM Partners, believes it was the wrong move. “It’s bad for BlackBerry if they have to stay private,” he argued in a recent issue Canadian Business. Going private will give BlackBerry much more freedom strategically and provide a shield against media scrutiny.

However, at this point that is extremely unlikely to happen. So what is BlackBerry to do? In short, make the most of its $1 billion cash injection, as well as the rest of its cash pile. Given the company is in the red, it’s apt to burn through this cash quickly, so it doesn’t have much margin for error.

“There is no more money after this,” affirmed James Faucette, an analyst at Pacific Crest Securities, in Canadian Business. “They’ve got to make this last not just a couple of quarters, but forever, until they can turn the company around.”

If they can turn the company around.