Saving BlackBerry: 'Strategic Review' could lead to company's sale
Published Monday, August 12, 2013 8:26AM EDT
Last Updated Monday, August 12, 2013 10:02PM EDT
Low demand for the BlackBerry Z10 has splashed cold water on the company’s hopes for a financial comeback, so Canada’s smartphone maker is now exploring “strategic alternatives” -- including its possible sale.
BlackBerry confirmed this week it was considering whether to look for a new owner, or start a joint venture, as it weighs its options.
“Essentially they’re admitting, to a certain extent, defeat,” said technology analyst Carmi Levy. “They’re not where they want to be in the market, and they need to seek an alternative path.”
BlackBerry launched its Z10 touchscreen phone and classic keyboard-style Q10 in a splashy campaign seven months ago. But the former tech giant, once a pioneer in smartphones, found itself unable to compete with the lure of Android and Apple devices.
Now, financial analysts say the company is running out of options.
“I think whatever they do is going to be drastic because you just can’t go up against the 800-pound gorilla, Apple,” said Michael Decter, president and CEO of Toronto-based LDIC Inc.
Whichever option BlackBerry chooses, it will impact the retirement funds of many Canadians.
The Canada Pension Plan alone has about $69 million invested in the company, and the Ontario Teachers’ Pension Plan has millions more.
If BlackBerry goes private, it would avoid investor scrutiny and focus on its core products.
BlackBerry could also sell its patents -- worth billions of dollars -- at a bargain price.
“Dell, HP, Samsung, Microsoft, Nokia, Amazon, these are companies rumoured to be interested,” said Levy.
“Right now I expect they smell blood in the water.”
One player that will almost certainly play a major role in BlackBerry’s future is insurance company Fairfax Financial.
Its chief executive, Prem Watsa, resigned Monday from BlackBerry’s board of directors to avoid any potential conflict of interest, as BlackBerry conducts its strategic review.
Watsa, who joined the board in early 2012, owns about 10 per cent of BlackBerry’s shares.
"I continue to be a strong supporter of the company, the board and management as they move forward during this process," he said in a statement.
"Fairfax Financial has no current intention of selling its shares."
BlackBerry board member Timothy Dattels, a senior partner at private equity firm TPG Capital, is heading the strategic review.
"Given the importance and strength of our technology, and the evolving industry and competitive landscape, we believe that now is the right time to explore strategic alternatives," Dattel said in a statement.
With reports from CTV’s Richard Madan and The Canadian Press