advertisement
Facebook
X
LinkedIn
WhatsApp
Reddit

BlackBerry sold to private investment firm

The biggest news that broke over the long weekend that’s just passed is that BlackBerry has agreed to be bought privately, by Canadian investment firm Fairfax Financial.

The troubled Canadian smartphone maker will accept Fairfax’s bid of US $4.7-billion to buy it, giving BlackBerry shareholders $9 in cash, per share. The deal Fairfax has an interesting history, and The Verge writes that its CEO, Prem Watsa, loves buying up ailing companies and righting them. But the purchase of BlackBerry could be personally driven, too, as Watsa’s firm already owns 10% of BlackBerry’s stock, and he’s often called it Canda’s greatest tech company.

It’s unclear how the deal will affect international operations just yet, but the strong subscriber base and BlackBerry’s existing deals with the world’s cellular networks. However, at least one telecoms analyst points out that the deal won’t solve BlackBerry’s problems.

“Taking BlackBerry private doesn’t solve the fundamental problems at the company,” says Jan Dawson, chief telecoms analyst at Ovum.

He points out that BlackBerry announced last week that it intends to abandon its consumer market, though with Fairfax heading up things that could change. The consumer market is still lucrative, and the company has a strong following of non-business users.

Dawson also points out that sales of BlackBerry devices aren’t doing well. This, after a protracted development period for BlackBerry 10, the company’s all-new operating system for its devices, and a number of new phones that use it.

“BlackBerry’s supply chain relies on scale for profitability, and it will never again be able to achieve the scale necessary to make money on devices,” says Dawson. This is especially true if it continues with its plan to abandon the consumer market, where it would do greater volumes.

With a strong intellectual portfolio and patent portfolio, though, the company could soldier on. Jan Dawson predicts that it’s likely BlackBerry will be out of the devices market entirely by the middle of 2014 – and making BBM available to other platforms is one step in that direction.

Most importantly, Dawson points out that private buyouts are usually a measure taken to let companies regroup and think about long-term strategies. He says that BlackBerry’s problem, for the last few years, has been that it has no long-term strategy.

He closes, “Unless Fairfax plans to radically change or accelerate BlackBerry’s strategy, it’s unlikely to be able to turn the company around. And that means we’re likely seeing the beginning of the end for one of the most iconic brands in mobile technology.”

advertisement

About Author

advertisement

Related News

advertisement