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Tuesday, August 13, 2013

The Once Dominant BlackBerry Explores Possible Sale

Thorsten Heins, the new CEO of Blackberry giving a
presentation on the BlackBerry 10.
As reported by Forbes: New CEO. Check. New name. Check. A new owner?

Call it BlackBerry Reboot, version 3.0. BlackBerry, the one-time tech giant battered by the shift to newer mobile-phone models, has formed a special committee to examine strategic alternatives. In other words, the beleaguered handset maker will try to sell itself or figure out some other last-ditch effort to save the business.

The committee will review possible joint ventures, partnerships or an outright sale of the company. Any option chosen should quicken the development of BlackBerry’s new software, the BlackBerry 10, says the Waterloo, Canada-based company. “During the past year, management and the Board have been focused on launching the BlackBerry 10 platform and BES 10, establishing a strong financial position, and evaluating the best approach to delivering long-term value for customers and shareholders,” says director Timothy Dattels, who’ll chair the special committee. “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.”

Blackberry, formerly RIM,  has been focusing on the release of
the Blackberry 10 and BES 10 prior to it's recent consideration.
Shares of  BlackBerry immediately rose yesterday 6.7% to $10.51 in pre-market trading, after the company momentarily paused training.

The decision to find a new escape route follows five years in which BlackBerry’s phones gave up their industry-leading position to Google‘s Android phones and Apple‘s iPhone. BlackBerry, which changed its name from Research in Motion earlier this year in a different bid to restyle the ailing company, experienced a 93% drop in share price during the past five years. And the company fell deeply into the red in 2012, posting a $646 million loss, in contrast to earning $3.5 billion just two years earlier.

A new name wasn't the only thing that BlackBerry tried. The two men who founded the company, former billionaires Mike Lazaridis and Jim Balsillie, both left their roles with the company within the past two years. Balsillie and Lazaridis, who had shared the CEO role, turned over  turned over control to current chief Thorsten Heins in 2012. Soon after, Balsillie stepped down as a director, and Lazaridis did likewise a few months later.

Excitement and increased expectations for the BlackBerry 10 operating system allowed Heins to orchestrate a rally in BlackBerry shares earlier this year. That was eventually quelled by lackluster reviews of the new phones, a dismal point for the company that first made email available in your pocket.

Putting itself up for sale has forced one director to step down. Prem Watsa, CEO of Fairfax Financial, resigned because he feared potential conflicts. Watsa’s Toronto-based Fairfax owns about 10% of BlackBerry, but his time on the board was a only a short stint. He became a director following the 2012 shakeup that propelled Heins to the top job. Watsa, whose investing letter is as closely examined as the annual address from Warren Buffett, is known as a skilled value investor and stockpicker.

Advising BlackBerry in the process are JPMorgan and legal firms Skadden, Arps and Torys.