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BlackBerry has a new group of high profile suitors

Google, SAP and Cisco all reportedly interestted in bidding on the struggling smartphone maker

Financial trends and news by Steven Loeb
October 5, 2013 | Comments
Short URL: http://vator.tv/n/3266

(Updated to reflect comment from BlackBerry and SAP)

It looks like BlackBerry has a new group of high profile suitors.

The company, which put itself up for sale back in August, is now seeing interest some such high profile suitors as Google, SAP and Cisco, according to a report from Reuters late Friday. 

BlackBerry already accepted a proposed $9 a share offer from a consortium led by Fairfax Financial Holdings last month, which would have amounted to $4.7 billion, but the company also kept the option to accept others bids as well.

Fairfax is BlackBerry's biggest shareholder, with a 10% stake.

It is unclear if these companies are looking to buy BlacKBerry outright or if they are planning to do what some of the company's other potential buyers were reportedly planning: to break the company up for parts.

Other companies that are said to be interested are Canada Pension Plan Investment Board, Bain Capital, and Chinese smartphone and computer maker Lenovo Group.

According to analysts, BlackBerry;s messaging system could be worth between $3 billion and $4.5 billion, while its patents could be worth between $2 billion and $3 billion. There is also another $3.1 billion in cash and investments.

The company itself is only valued at $5.4 billion.

"The Special Committee, with the assistance of BlackBerry’s independent financial and legal advisors, is conducting a robust and thorough review of strategic alternatives," a BlackBerry spokesperson told VatorNews.

"We do not intend to disclose further developments with respect to the process until we approve a specific transaction or otherwise conclude the review of strategic alternatives."

A spokesperson for SAP declined to comment. VatorNews has also reached out Google and Cisco but they were not available for comment.

Potentially interested parties seem to be hesitant to enter any deal to buy the company, and for good reason. Things have not been going well for a while not, and its latest quarterly earnings report was particually bad.

The company reported revenue of $1.6 billion, with a net loss of $965 million, or $1.84 a share. That seems all the more terrible when compared to the same time last year, when the company was seeing revenue of $2.9 billion and a loss of only $229 million, or 44 cents a share. Revenue dropped 45% in that time.

Sales during the quarter amounted to only 3.7 million smartphones. They have been so bad, in fact, that T-Mobile recently dropped the phones from its brick and mortar stores.

T-Mobile is not completely dropping the devices; the company will still sell the phones, but will only ship them directly to consumers. They will also continued to be displayed in stores, but this move is a sign that BlackBerry phones simply are no longer popular with the general public; they are mostly purchased and distributed by businesses now. 

On top of all of that, the company will also be slashing 40% of its total workforce, or 4,500 employees, as well as cutting down its smartphone portfolio to four devices from six.

Those cuts follow BlackBerry laying off 250 employees in new product testing and R&Dgot rid of another 100 jobs in August at its Waterloo, Ontario headquarters and firing 60 members of its sales team in August.

Shares of BlackBerry ended Friday down 0.52%, or 4 cents, to $7.69 a share.

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