Would Anyone Buy BlackBerry?

August 12, 2013 17:50 by Clayton Reeves in Capital Markets, M&A, Telecom  //  Tags: , , , ,   //   Comments (0)

Today, BlackBerry halted trading of their shares and announced their intentions to explore strategic alternatives in an effort to ensure their BlackBerry 10 release goes well.  They have formed a Special Committee of the Board in an effort to make these strategic plans more tangible. Timothy Dattels, Chairman of the aforementioned special committee, recently said, "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."  This effort has apparently expanded beyond the walls of BlackBerry to include a potential corporate transaction.

So, given the fact that BlackBerry is now exploring their options, what will we see happen in the next weeks and months? There are basically two options: BlackBerry can go private or they can be sold to another company.

Going Private: This would remove the quarterly stress of earnings, continuously swirling negative sentiment and allow the company to reinvent itself from the relative privacy a private company enjoys. Right now, they are caught in a downward spiral of tremendously reduced market share, a series of failed products and an angry investor base. Going private could help to stem this tide. However, it won't change the intrinsic nature of the company, which has been producing some lackluster offerings in the mobile sphere.

Selling the Company: This is the other primary alternative this special committee is most likely considering.Who would buy a former market leader that has been destroyed in recent years by Apple, Google and Microsoft? Well, Microsoft might be a potential landing spot for BlackBerry. The Windows Phone has picked up some steam, and Microsoft could have an interest in eating up BlackBerry's market share and trying to keep it for themselves. One intriguing possibility for BlackBerry would be a Chinese acquirer.  Companies like Huawei and ZTE have the capital and ambition necessary to play in the North American arena, and it may be more cost and time effective to resurrect a struggling brand like BlackBerry than start from scratch.

So, there are two main alternatives for the committee to consider, both with potential pitfalls and challenges.  However, either option could prevent the only way for BlackBerry to halt their downward slide.  It will be interesting to see who comes forward in this process, vying for a chance to buy the former market leader.

Click here to read the press release from BlackBerry.

Past Posts