BlackBerry: More Bullets to Fight

11 November 2013
By Ivan Rikhmayer, Senior Mobile Software Engineer

Once the mobile device giant and dominant smartphone player, BlackBerry was prepared to be sliced into pieces and sold off. Their spokesperson had reported a quarterly loss of $1billion in September. Sales were under the estimated value due to smartphones powered by the Android mobile platform and Apple iOS dominated the market.

The company was soliciting bids after agreeing last month to a tentative $4.7bn offer from its shareholder, Fairfax, and had until 4th November to consider other proposals. Lenovo tried to bid too, but the Canadian government rejected it. On top of that, BlackBerry announced it cuts 4500 jobs last month, which is about 40% of its workforce. The company blamed “more intense competition” following poor sales of its latest devices, the Z and Q lines, released in January and April.

BlackBerry’s board, and its chief executive Thorsten Heins, bet the future of the company on its new BlackBerry 10 operating system, launched this year, and the handsets that use it – the touchscreen Z10 and the QWERTY keyboard-enabled Q10. But it’s clear the bet was lost. The new handsets had failed to make any headway in a market increasingly dominated by Apple’s iPhone and smartphones based on Google’s Android operating system including Samsung’s Galaxy family of handsets.

From the sales announcement till 4th of November, BlackBerry considered different bids and opportunities. But on the day, the company announced a move that no one had expected. BlackBerry will receive a $1-billion injection from Fairfax Financial and other investors. BlackBerry has concluded their review of strategic alternatives and will also be making changes to the board. John S. Chen will be appointed Executive Chair and Interim CEO while Fairfax CEO Prem Watsa will be appointed Lead Director. Current BlackBerry CEO Thorsten Heins will step down as CEO at the closing.

Ms. Stymiest added, “I am also pleased that John Chen, a distinguished and proven leader in the technology industry, has agreed to serve as BlackBerry’s Executive Chairman. I look forward to continuing to serve BlackBerry as a member of its Board of Directors and chair of the Board’s Audit and Risk Management Committee. On behalf of the Board, I would also like to thank Thorsten for his service to BlackBerry over the past six years. Under his leadership, BlackBerry established a more efficient cost structure, developed new products, saw the adoption of the BES 10 and delivered the BlackBerry 10 platform. These are all significant accomplishments. We are grateful for his contributions and wish him well in his future endeavors.”

So, no one wants to buy BlackBerry? – That’s a clear NO.

What does BlackBerry staying public mean? Would this be just another ugly earning report in December and playing along to the comedy? – Unlikely

That said, the financing BlackBerry has arranged with Fairfax is a smart plan all around. It gives the company some extra cash to make a turnaround, whereas going private would not do so but will free the company from the investors pressing it, which has its pros. That’s the difference. It gives this company an extra chance to feign death, if you would. I still have a good-looking BBRY in my hand that works just how I want, so therefore I’m happy for now! What tomorrow will bring is a mystery.

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