BlackBerry is abandoning a plan to sell itself, the major thrust of the rescue campaign crafted by the smartphone company's board, and has said its chief executive will resign.

Unable to get a buyout offer finalised after a strategic review that lasted more than two months, BlackBerry said it will raise about $1 billion from Fairfax Financial Holdings and other institutional investors.

The moves pushed BlackBerry shares sharply lower.

"Now we're back to the downward spiral," said BGC Partners analyst Colin Gillis. "They've got $1 billion more cash that buys them time. The drumbeat of negativity is likely to continue."

BlackBerry grew from a small technology start up into a multibillion-dollar company by pioneering on-the-go email. However it has lost much of its market share to Apple Inc's iPhone and devices that run Google Inc's Android software.

BlackBerry said Chief Executive Thorsten Heins will leave in about two weeks, as soon as the Fairfax-led private placement of convertible debentures closes.

His interim successor will be John Chen, the former CEO of Sybase, a database software company that SAP AG acquired in 2010.

Chen stressed his experience as a turnaround artist in an interview with Reuters, where he also said he has no interest in shutting down BlackBerry's handset business.

Chen will also be BlackBerry's new executive chairman. He joined private equity group Silver Lake as senior adviser a year ago, but he said his involvement with BlackBerry has nothing to do with his ties to Silver Lake.

"Fairfax's investment will buy the company some time, which it badly needs, but the company needs a new strategy more than ever," said Jan Dawson, Ovum's chief telecoms analyst, noting that communication on the strategy must start "very soon".

Fairfax has agreed to buy $250 million of the seven-year subordinated debentures, which will be convertible into common shares at $10 each.

The private placement could eventually increase the number of BlackBerry shares by as much as 20%.

BlackBerry did not name the other institutional investors participating in the deal, but Chen said Silver Lake is not one of them.

"I know we have enough ingredients to build a long-term sustainable business," he told Reuters. "I have done this before and seen the same movie before."

BlackBerry had been talking with a number of companies, including Cisco Systems, Google, SAP, Lenovo Group Ltd, Samsung, LG Electronics and Intel about selling parts or all of itself, Reuters reported previously.

But the only public offer came from Fairfax, which announced a tentative $9-a-share bid in late September. Reuters said on Friday that Fairfax was struggling to fund the $4.7 billion bid.

Moody's said in September that that transaction would hurt Fairfax's credit profile because it would convert a public equity investment into a private structure.

The current deal is structured to give Fairfax and the other investors flexibility as the financing is in the form of convertible debentures.

The investors have an option to buy up to an additional $250 million worth of debentures within 30 days following closing.