BlackBerry reportedly in talks to go private

Ian Hardy

August 9, 2013 8:01 am

heinsbbamericas
The latest rumour to circle about BlackBerry is not a new smartphone, but that the company is entertaining the idea of going private. Reuters “several sources familiar with the situation” revealed that the board is favouring this route and believe being a private company “would give them breathing room to fix its problems out of the public eye.” The company noted in the report is private equity firm Silver Lake Partners, same company who’s behind Dell’s current private dealings, but they make it clear that “no deal is imminent” and “BlackBerry has not launched any kind of a sale process.”

Ever since Thorsten Heins, BlackBerry’s CEO, took over the reins he stated that the company was not for sale, but could potentially look at licensing BlackBerry 10 to other manufactures. In an interview last year Heins stated “We don’t have the economy of scale to compete against the guys who crank out 60 handsets a year. We have to differentiate and have a focused platform. To deliver BB10 we may need to look at licensing it to someone who can do this at a way better cost proposition than I can do it. There’s different options we could do that we’re currently investigating.”

BlackBerry reported 6.8 million smartphone shipments last quarter and revenues of $3.1 billion, but also recorded an operating loss of $84 million.

Source: Reuters

  • MXH070

    Yep this would be a good move for BlackBerry.

  • Miles Harbord

    It sure as hell would benefit the heck out of all the BB execs as they divest. Beyond that I’m not sure what this really does for them, they’ve been flipping the bird to their stock holders for ages now, they should have got out of the handset/OS business 4 to 5 years ago, and never entered tablet business at all. Their stock holders have known this for at least the last 3 years. If going private gives them more room to continue to run the business into the ground I think it’s a bad move. I wouldn’t care, but BB owns a huge share of the Canadian tech industry, and all sorts of jobs go away if they can’t figure out how to handle this properly and simply fail.

    • Stephen_81

      Why this will be Good for BlackBerry is less negative Press.
      BlackBerry 10 is a fantastic bit of software ( 10.2 more so than 10.0 was) and They are continuing to improve it at a great pace.
      BUT the constant talk about share price is damaging credibility when trying to negotiate large BES deals and causes unease by people who don’t understand the wireless industry and don’t want to buy a phone because they read that “Research in Motion is going bankrupt” when that has never even been close to the case.

      They also remove the need to have quarterly announcements about how business is doing which means they can plan longer term instead of trying to make people happy in 3 month bursts.

      BlackBerry Execs would NOT benefit from a buy out, just as I wouldn’t because most of them like myself own shares valued much greater than the current price ($15.24 is my break even) so while they’d get a cash infusion it would be at a lower value then they could get if BlackBerry makes a slight turn around.

      5 years ago BlackBerry was at the top of their financial game actually I believe 5 years ago this month they were at their all time high, far from a time they should be exiting out of the business.

      3 years ago MAYBE BlackBerry should have been addressing their hardware business, I’m a firm believer that their loyalty to Marvell is what killed them in 2010, they should have followed the industry sooner and migrated both CDMA and GSM to Qualcomm, but that is another post.
      BlackBerry’s problem with the tablet market is they tried to sell the PlayBook as an iPad competitor,it never was meant to be that, it was a great extension of BlackBerry 6/7 devices.

  • Gritor

    Thor has accomplished nothing as new CEO – literally nothing..since he joined to now, the stock is lowered. His poor management decisions and fluff doesn’t vibe well with investors.

    • JTon

      I think you’re being overly dramatic. Thor would be sung a hero if BB10 was marginally more successful. Everything was leading up to that until the last earnings call.

    • A. Avanzado

      I think Thor accomplished a lot. First he needs to clean up the crap that the previous CEOs has done to make Blackberry look like this. Blackberry is better to go private because investors and boards are just into making money and this will further deteriorate Blackberry. I would say give it some time for the product to grow…. It will get its chance.

  • Josh Brown

    Especially since the stock is dirt cheap

  • southerndinner

    The first good idea they’ve had in 3 years

  • KrispyInTO

    They need to get out while they can and ditch BB10 and make hardware with android. The should learn from nokia and windows phone….and windows phone even has a higher market share then bb10.

    • Supa_Fly

      Windows phone has higher marketshare yet ONLY in specific and still limited range of markets across the globe. RIM still has a larger market share comparing their 2 smartphone platforms to Nokia’s 3 or 4 on a global scale. Read the facts.

      Windows Phone is NOT doing so well as users and as Nokia had hoped for them.

  • wildspin

    From a Wells Fargo analyst’s take, it sounds that many problems of BBRY are actually results of mismanagement:

    As BlackBerry mulls going private, analysis sees smaller company being public & profitable

    By Neil Hughes

    Executives at BlackBerry are reportedly
    considering taking their struggling company private, but a new analysis
    suggests the company could stay public — if management were to accept
    the fact that it is now a smaller smartphone company.

    Over the last four quarters, the share of BlackBerry’s share of revenue
    spent on selling, general and administrative expenses, as well as
    research and development, has greatly exceeded rivals like Nokia and
    Apple. Those high operating expenses suggest to Maynard Um of Wells
    Fargo that BlackBerry could succeed — and do so as a public company — if
    its executives could embrace “the reality of being a smaller company.”

    “We continue to believe that BlackBerry has a small but loyal following
    and that it could reduce spending to focus on core target markets,” Um
    said in a note to investors on Friday.

    In the last year, 18.8 percent of BlackBerry’s revenue has been spent on
    SG&A, a sum much larger than Nokia’s 13.2 percent. Apple has much
    greater scale than those two companies, but for comparison’s sake, 6.3
    percent of the iPhone maker’s revenue was spent on SG&A.

    As for R&D, it took 12.9 percent of BlackBerry’s revenue over the
    last year, compared to 11.3 percent of Nokia’s devices business, and 2.5
    percent of Apple’s revenue.

  • Sweet

    I’m not sure this is the best use of their money. If BB management thinks they can afford it, then that would suggest that their next quarterly report is going to be really good.

  • AKDISQUS

    Fake news Thor clearly stated in General shareholders meeting that he will not deviate from their transition phases by distracting management on takeovers. He also added for a takeover to be successful, we first has to create value for the company.

    So either way, company is not even ready for that nor does Thor believe this is the right time to have such talks.

    Reuters “anonymous” source is most likely a hedge fund pumping the stock for a quick trade.