BlackBerry Gets More Cash from Fairfax

Source: http://www.flickr.com/photos/mr_t_in_dc/

BlackBerry (NASDAQ:BBRY) announced Thursday that its largest shareholder, Fairfax Financial Holdings, will buy $250 million in convertible debentures to provide the struggling smartphone maker with cash.

BlackBerry said the transaction will be completed on or before January 16. This purchase is in addition to the $250 million worth of BlackBerry debt that Fairfax bought in November, when the smartphone maker made the surprise announcement that it was abandoning plans to sell itself and would instead attempt a turnaround. BlackBerry sold a total of $1 billion in debt at that time to Fairfax and other investors.

After BlackBerry announced it would not sell itself, the company’s stock fell even further, as many are skeptical about the company’s chances for a successful turnaround in the highly competitive smartphone industry. BlackBerry arguably pioneered the modern smartphone, but the company’s latest devices have failed to catch on with consumers among competition from Apple (NASDAQ:AAPL) and Samsung (SSNLF.PK).

BlackBerry’s new CEO, John Chen, remains confident that the company can engineer a turnaround by focusing on its business and enterprise customers rather than consumers, who have largely spurned the company’s products. BlackBerry devices have had a kind of cult following among businesspeople, as the full keyboard makes it easier to type long emails via mobile.

In line with those goals, Chen announced at the Consumer Electronics Show in Las Vegas on Monday that BlackBerry would soon return to making full-keyboard phones. The BlackBerry 10 line of touchscreen devices performed terribly and led to huge write-downs for the company last year. While consumers seem to love touchscreen phones from Samsung and Apple, Chen believes that making keyboard phones targeted at corporate customers is where BlackBerry can find its niche. “I personally love the keyboards,” Chen said in an interview with Bloomberg TV.

Now that Fairfax has doubled up on its BlackBerry debt, it remains to be seen if BlackBerry can use the cash to pull off Chen’s restructuring and start making money again.

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