BlackBerry’s fate should serve as a stark reminder of how truly agile strategies should be to survive in today’s unforgiving business climate.
The latest developments reveal a desperate situation at the heart of the Canadian firm, which has had to release Thorsten Heins, its chief executive of less than two years, in an agreement with investors after takeover talks with Fairfax Financial Holdings were scuppered.
In the new deal on the table BlackBerry has received investment of $1 billion (R10bn) from Fairfax and other institutional investors through private placement of convertible debentures.
Fairfax had agreed to acquire the $250 million principal amount of the debentures within the next two weeks, BlackBerry said in a statement yesterday.
The purchasers will subscribe for the debentures, which are convertible into common shares of BlackBerry at the price of $10 a share.
This represents a 28.7 percent premium to the closing price of BlackBerry common shares on Friday. The debentures have a term of seven years.
“If all of the $1bn of debentures were converted, the common shares issued upon conversion would represent approximately 16 percent of the common shares outstanding after giving effect to the conversion,” the company said.
John Chen has been ushered in as the interim chief executive pending the conclusion of a headhunting process for a new leader. He is also the executive chairman and will steer strategy.
Chen has held various senior positions in the global information and communication technology arena.
Barbara Stymiest, the chairwoman of the board, called yesterday’s announcement a “significant vote of confidence in BlackBerry and its future by this group of pre-eminent, long-term investors”.
One cannot help but wonder what BlackBerry, once truly the doyenne of the smartphone market, would have done differently if it knew then what it knows now.
Investment bill
As expected the governments of countries whose companies enjoyed privileged positions as investors in South Africa are squealing about the termination of the bilateral investment treaties that provided this privilege.
Although international companies are now large, powerful and wealthier than most of the governments they do business with, it is an inevitable part of their modus operandi to lobby these governments for improved access to what ever is on offer – be it mineral resources or growing markets. When lobbying doesn’t work, then complaints and dire warnings about the impact on jobs are next in their box of tricks.
Of course, the most important thing for companies, as for individuals, is certainty. Make the rules to suit the majority of citizens, keep them simple and stick to them. That should make us all happy.
Judging by UN Conference on Trade and Development comments, the use of bilateral investment treaties anywhere on the globe is on the way out and in South Africa’s case there seemed little correlation between the presence of a treaty and investment flows.
Trade and Industry Minister Rob Davies says the termination of such treaties must be seen in the context of international developments and has nothing to do with the potential threat, provided by the treaties, of the government facing a legal challenge from a disgruntled international investor.
This appears to be the key distinction between the bilateral investment treaties and what the Promotion and Protection of Investment Bill provides for.
Amazingly, the only known legal challenge in terms of a South African treaty was the unsuccessful one from granite firms back in 2007.
However, the South African government might be watching current developments in Australia with some concern. British American Tobacco and Phillip Morris are suing the Australian government in a desperate bid to block a plan to introduce plain packaging on cigarettes.
The cigarette companies are alleging that the move is tantamount to an expropriation of their rights.
Retailers
Raymond Ackerman, the founder of Pick n Pay, says retailers should take advantage of online retail and that large supermarkets will not die out as some analysts claim.
Speaking on the sidelines of the World Retail Congress Africa, he said he saw online shopping for certain products as “a very big and important part of our growth”.
“There is no question about it – we have to be very smart about how we handle online,” Ackerman said.
Pick n Pay, which Ackerman chaired until 2010, is one of many local retailers who have taken up online strategies, and is the only major retailer that delivers groceries ordered online within the hour.
The company, which has been hard hit by financial troubles leading to its retrenchment of 400 workers, grew its online shopping turnover by 24 percent in the six months to September.
Ackerman said retailers needed to innovate in the type of stores they sold in, noting that smaller supermarkets were gaining popularity over larger format hypermarkets.
“There is definitely a trend from the big supermarkets of 10 years ago, a trend to smaller and more convenient supermarkets. There is still place for larger hypermarkets; despite some people thinking they may be dying, they’re not,” Ackerman said.
Analysts in Europe and the US have advised against developing large footprint stores as online retail sees an upsurge globally.
“In a hypermarket you have to be very good at general merchandising – give people a reason to come out of town instead of being close by,” Ackerman said.
Edited by Peter DeIonno. With contributions by Asha Speckman, Ann Crotty and Zandi Shabalala.