Chen’s BlackBerry Revival Task Mirrors Sybase in 1990s

Nov. 5 (Bloomberg) -- Hugo Miler and Cristina Alesci report on struggling smartphone maker BlackBerry's chances of a revival. They speak on Bloomberg Television's "In The Loop." (Source: Bloomberg)

Fifteen years after saving Sybase Inc. from its death spiral, John Chen is being called upon to revive a beaten-down BlackBerry Ltd.

Chen, 58, was named interim chief executive officer of BlackBerry yesterday 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 yesterday. 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.

Photographer: Jin Lee/Bloomberg

John Chen, chairman, chief executive officer and president of Sybase Inc., prepares for an interview from the floor of the New York Stock Exchange in this 2010 file photo. Close

John Chen, chairman, chief executive officer and president of Sybase Inc., prepares for... Read More

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Photographer: Jin Lee/Bloomberg

John Chen, chairman, chief executive officer and president of Sybase Inc., prepares for an interview from the floor of the New York Stock Exchange in this 2010 file photo.

BlackBerry, based in Waterloo, Ontario, fell 16 percent yesterday to $6.50 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.

Related: BlackBerry Comeback Hampered by Vanishing Cash

Chen, who served on former President George W. Bush’s export council and is a board member at Wells Fargo & Co. and Walt Disney Co., 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 yesterday 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 yesterday’s statement. Prior to Sybase, Chen held executive positions at Siemens AG, 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 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

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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