Troubled BlackBerry puts itself up for sale

  • @greentoby

BlackBerry, the struggling mobile phone maker that has been fighting a losing battle against Apple and Samsung, has put itself up for sale.

The Canadian company announced yesterday it was considering going private and has set up a committee to examine the possibility. It will also look at other options to revive its fortunes, including potential joint ventures, alliances and strategic partnerships.

“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,” said Timothy Dattels, a BlackBerry board member who will chair the new committee.

The company has embarked on a raft of measures in recent years to try to reclaim past glories, including changing its name from Research In Motion. But it has struggled to regain ground lost to Apple’s iPhone as well as Samsung’s devices and other handsets using Google’s Android operating system.

Analysts poured cold water on the idea of a change in structure helping it take back its position. BMO Capital Markets’ Tim Long said he did not “envision any changes that would help BlackBerry reverse the significant smartphone share loss or rapid decline in service revenues”.

Earlier this year, BlackBerry launched a new flagship handset, the Z10, which – in a departure for the company – did not have a physical keyboard.

However, in June it dismayed shareholders by announcing a $84m (£54m) first-quarter net loss, and declined to reveal how many Z10 handsets had been sold. Instead it said it had shipped about 2.7 million handsets using the new operating system – worse than analysts had expected and a long way short of the 37.4 million iPhones shipped by Apple in the first three months of the year.

Before yesterday’s announcement was made, BlackBerry’s market value had plummeted to less than $5bn from $84bn in 2008. Its shares, which have dropped more than 45 per cent since January, were up 5 per cent at C$10.60 in afternoon trade.

BlackBerry last year hired JPMorgan and RBC Capital Markets to help it look at potential strategies, although its chief executive Thorsten Heins had said a sale was not the “main direction” being examined.

Speculation that a leveraged buyout or a move private could be on the cards was also sparked by the appointment to the board last year of Mr Dattels, a senior partner at private equity firm TPG Capital and a former investment banker at Goldman Sachs.

Poison berry? Warning to suitors

BlackBerry may be considering a sale, but it remains to be seen who would actually want to buy it.

Yang Yuanqing, the chief executive of the Chinese PC maker Lenovo, reportedly said earlier this year a deal “could possibly make sense.”

But given Canada’s strict stance over the implications of takeovers for national security and competition, there was speculation yesterday that the company’s largest shareholder, the Canadian insurer Fairfax Financial, could take part in any move. Its chairman and chief executive Prem Watsa announced he was stepping down from BlackBerry’s board “due to potential conflicts that may arise”, and added Fairfax had “no current intention of selling its shares”.

Meanwhile, ETX Capital’s Joe Rundle warned that struggling sales means buying BlackBerry “could be a fatal move for any rival”.