Chen’s BlackBerry Revival Task Mirrors Sybase in 1990s

November 5, 2013 Leave a comment

Chen’s BlackBerry Revival Task Mirrors Sybase in 1990s

Fifteen years after saving Sybase Inc. from its death spiral, John Chen is being called upon to revive a beaten-down BlackBerry (BB) Ltd. Chen, 58, was named interim chief executive officer of BlackBerry today after the collapse of a proposed $4.7 billion buyout. He takes over a company that’s lost 95 percent of its value since mid-2008, as the mobile world shifted to touch -screen smartphones and tablets and away from BlackBerry’s e-mail-centric devices.It’s a familiar setting for Chen. When he assumed control of Sybase in 1998, the software maker was in the midst of a restructuring, had announced plans to cut 10 percent of its workforce and was trading near a record low. In 2010, he sold Sybase to SAP AG for $5.8 billion, more than six times its value at the start of his tenure. Chen won’t have that long to engineer a turnaround at BlackBerry, with the company planning a $1 billion convertible bond sale as it burns through cash.

“John Chen knows how to manage a mobile company and, perhaps more importantly, can make things happen in the industry,” Jack Gold, an industry analyst, wrote in a report today. He can “bring either new growth to the company or position the company to be acquired at a higher premium than it can currently demand,” Gold wrote.

BlackBerry, based in Waterloo, Ontario, fell as much as 18 percent today to $6.40 after Fairfax Financial Holdings Ltd. abandoned a takeover plan, leaving the company to tap the debt market. Chen will become interim CEO while BlackBerry seeks a permanent replacement for Thorsten Heins, who is stepping down.

Chen, who served on former President George W. Bush’s export council and is a board member at Wells Fargo & Co. (WFC) and Walt Disney Co. (DIS), said he isn’t just planning to negotiate a quick sale.

Chen’s Focus

“I’m not going to look for somebody to do a deal,” Chen said today in an interview. “I’m going to focus on making the business better. There are lots of assets in the company, and there are some really good things happening, and we need to find a way to broaden it, monetize it and serve the market a little better and more aggressively.”

Asked if he might close the money-losing handset business, Chen said he isn’t ruling anything out. “I’m more focused on making sure our businesses are healthy and growing,” he said.

Chen, a native of Hong Kong, joined Sybase in 1997 and left in 2012, two years after the Dublin, California-based company was acquired. Sybase, the second-biggest acquisition for SAP, armed the German software maker with mobile technology that helped fuel co-CEO Bill McDermott’s plan to bring its financial and supply-chain management software to iPads and other devices.

Far Behind

Sybase at the time was far behind Oracle Corp., Microsoft Corp. and International Business Machines Corp. in the database-software market and had expanded into mobile-data management under Chen.

In 2009, before Sybase was sold, Chen’s compensation totaled $9.3 million, according to data compiled by Bloomberg.

Last year, Chen recounted how research firm Gartner Inc. predicted a 70 percent probability for “Sybase’s death” when he joined the company. In an interview with Bloomberg News, he compared selling Sybase to “marrying off your daughter” and said he was going to stay in the technology industry because “I don’t have any other skills.”

After leaving SAP, Chen was appointed senior adviser at private-equity firm Silver Lake Management LLC. While he is still listed on Silver Lake’s website, BlackBerry didn’t mention the affiliation in today’s statement. Prior to Sybase, Chen held executive positions at Siemens AG (SIE), Pyramid Technology Corp. and Burroughs Corp.

Prem Watsa, the CEO of Fairfax, said the firm is betting on Chen after he proved himself in turning around Sybase. Fairfax, BlackBerry’s largest shareholder, will invest $250 million in the convertible debentures.

“Sybase’s stock price was down 90 percent when he took it over,” Watsa said today in an interview. In the 12 years Chen ran Sybase, he rebuilt the company and rewarded investors, Watsa said. “That’s just outstanding performance. That’s what John Chen brings here.”

To contact the reporters on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net; Hugo Miller in Toronto at hugomiller@bloomberg.net

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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