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BlackBerry officially puts itself up for sale

Experts aren't so sure the company would find a buyer, though

Financial trends and news by Faith Merino
August 12, 2013 | Comments
Short URL: http://vator.tv/n/314a

BlackBerry isn’t saying it will go private, but it will go private for the right price. Sooo, you knooow, if anyone wants to make an offer, BlackBerry will just be hanging out this weekend. It doesn’t have any plans. It has its phone (lol) if you want to call or text…

BlackBerry decided to just come out and announce Monday morning that it is, indeed, looking at “strategic alternatives to enhance value and increase scale in order to accelerate BlackBerry 10 deployment.” The alternatives it is considering include strategic partnerships or alliances, a sale of the company, or “other possible transactions.”

Shares were up 4.5% to $10.20 Monday morning after news leaked Friday that the company was considering a sale. Prem Watsa, CEO of BlackBerry’s largest shareholder, Fairfax Financial, is resigning from BlackBerry’s board to avoid any conflicts of interest. Watsa joined the board in early 2012 when BlackBerry’s co-CEOs stepped down to make way for Thorsten Heins, when BlackBerry (then Research In Motion) was attempting to revitalize business.

But the revitalization efforts haven’t panned out. The PlayBook tablet was a massive, unapologetic flop, and the BlackBerry 10 OS isn’t showing any signs of being the savior BlackBerry needed. But Heins is keeping a candle lit:

"We continue to see compelling long-term opportunities for BlackBerry 10, we have exceptional technology that customers are embracing, we have a strong balance sheet and we are pleased with the progress that has been made in our transition,” Heins said in a statement. “As the Special Committee focuses on exploring alternatives, we will be continuing with our strategy of reducing cost, driving efficiency and accelerating the deployment of BES 10, as well as driving adoption of BlackBerry 10 smartphones, launching the multi-platform BBM social messaging service, and pursuing mobile computing opportunities by leveraging the secure and reliable BlackBerry Global Data Network."

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.

 But BlackBerry’s struggling sales and shrinking cash cushion leave many experts skeptical that the company would even be able to find a buyer. UBS analysts Amitabh Passi and James F. Hillier wrote in a research note that while BlackBerry seems to be focusing more on software and services, it’s too little, too late. BlackBerry still has an installed user base it can leverage, but Passi and Hillier say that the cost of client retention will be high.

“UBS doesn’t think PE firms would be interested given the challenges facing the company,” Passi and Hillier wrote in a research note.

“If any investor group is interested in a takeover to acquire [BlackBerry] they are doing it for one of two reasons,” said Queens University business professor John-Kurt Pliniussen to Global News. “The first being they think it’s a deal—that they can milk the company and sell off its assets, or—two—they have access to information that we don’t know about.”

 

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