BlackBerry to go private as it attempts to restructure?

The company is rumored to be giving careful consideration to the idea of going private

Financial trends and news by Faith Merino
August 9, 2013
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BlackBerry has seen better days. It could’ve been somebody. It coulda been a contender! (Technically, it was, so that movie quote isn’t entirely analogous.) Since its peak in 2007, BlackBerry’s market cap has fallen 96% to $4.84 billion. Now it’s looking like the Z10 isn’t the saving grace everyone thought it was going to be. The company needs to do some massive restructuring, but under the watchful eye of shareholders, that's not so easy. So BlackBerry is reportedly considering going private.

There is no deal in the works at the moment, and the company hasn’t launched any kind of sale process, sources have said. But CEO Thorsten Heins and the Board are growing increasingly comfortable with the idea of going private.

The news comes one day after news broke that three BlackBerry executives are leaving the company (SVP of global manufacturing and supply chain Carmine Arabia, VP of corporate IT operations Doug Kozak, and VP of service operations Graeme Whittington). And that’s just two weeks after BlackBerry laid off 250 employees in new product testing and R&D.

The company says the layoffs are part of its overall resurrection plan, ensuring it has “the right people in the right rolls with the right skillsets.”

That sounds almost uplifting, except for the fact that the company’s last earnings report was entirely bleak. BlackBerry sold a total of 2.7 million BB 10 OS handsets in the June quarter when many had predicted BlackBerry would sell at a good three million Z10 devices alone. But that 2.7 million figure includes both Z10 and Q10 sales. Altogether, BlackBerry’s BB 10 devices made up just 40% of its total handset sales, which means most of its sales were cheaper, older devices.

BlackBerry’s dreary BB 10 sales pale in comparison to its smartphone rivals. Samsung sold 10 million S4 handsets in its first month. Apple sold 31.2 million iPhones last quarter. Even Nokia did better than BlackBerry, selling 5.6 million Lumia devices in the first quarter. Nokia!

Heins has said that the company is still in the early stages of the BlackBerry 10 platform launch, and that over the next three quarters, BlackBerry will be increasing its investment in the platform to roll out new products and services.

Now is as good a time as any for BlackBerry to go private, but would it even be able to find funding? The company is hemorrhaging money and subscribers are bailing. It’s hard to imagine there would be any investors lining up to throw money at that. 


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