TORONTO (Reuters) - Struggling smartphone
maker BlackBerry is mulling options that could
include joint ventures, partnerships or an
outright sale, as the company's leading
shareholder steps down from its board in a
possible prelude to taking a different role.
BlackBerry, which pioneered on-your-hip email
with its first smartphones and email pagers,
said on Monday it had set up a committee to
review its options, sparking debate over whether
Canada's one-time crown jewel is more valuable
as a whole or snapped up piece by piece by
competitors or private investors.
The company said Prem Watsa, whose Fairfax
Financial Holdings Ltd is BlackBerry's biggest
shareholder, was leaving the board to avoid a
possible conflict of interest as BlackBerry
determines its next steps.
The resignation of Watsa, often described as
Canada's version of Warren Buffett, suggests
Fairfax may be part of a solution.
BlackBerry, once a stock market darling, has bled
market share to the likes of Apple Inc and
phones using Google Inc's Android operating
system, and its new BlackBerry 10 smartphones
have failed to gain traction with consumers.
Blackberry shares rose 7.5 percent to $10.80 in
New York and C$10.84 in Toronto in afternoon
trading. But the shares remain well below the
levels seen in June, before the company
reported dismal results that included poor sales
of the BlackBerry 10 phones it viewed as key to
a successful turnaround.
The share price peaked at about C$150 in June
2008.
A clean balance sheet makes the smartphone
seller an enticing takeover candidate. Like Dell
Inc, it is a tech icon in need of a turnaround.
But BlackBerry's cash flow is worse, meaning
leverage would be extra risky.
The company's assets include a well-regarded
services business that powers BlackBerry's
security-focused messaging system, worth $3
billion to $4.5 billion; a collection of patents that
could be worth $2 billion to $3 billion; and $3.1
billion in cash and investments, according to
analysts.
But the smartphones that bear its name have
little or no value, and it may cost $2 billion to
shutter that unit, the analysts said.
Analysts expressed skepticism about the new
committee, noting that BlackBerry announced
similar steps more than a year ago when it hired
JPMorgan and RBC as financial advisers. A
source said both are still involved in the
strategic review.
"While a change in structure could result in a
higher stock price in the near term, we do not
envision any changes that would help BlackBerry
reverse the significant smartphone share loss or
rapid decline in service revenues," said Tim
Long, analyst at BMO Capital Markets.
Watsa said Fairfax has "no current intention" to
sell its BlackBerry shares. But if he remained on
the board of directors, he would have a conflict
of interest if he wanted to be part of a play for
BlackBerry.
"I continue to be a strong supporter of the
company, the board and management as they
move forward during this process," he said in a
statement.
BlackBerry's fate is likely to prompt questions
from the Canadian government, which vets
foreign takeovers of Canadian firms. The
government said it would not comment on
speculation about the company, but a
spokesman for Industry Minister James Moore
said the government wished BlackBerry well.
BREATHING ROOM
A source familiar with the situation told Reuters
that the board decided to form the special
committee last week. It was not clear if that
decision was made before or after Reuters
reported that BlackBerry was warming to the
idea of going private to give itself breathing
room to recover.
One source said BlackBerry has been talking to
private equity firm Silver Lake Partners about
potential collaboration in enterprise computing.
A senior executive at a large Canadian pension
fund that has worked with private equity players
said on Friday that any prudent pension fund
would look at BlackBerry or consider partnering
in a private equity deal.
"If private equity can buy Dell, they can buy
anything," the executive said, referring to efforts
by Silver Lake and Dell Inc founder Michael Dell
to buy the computer maker.
Deep-pocketed Canadian pension funds, with
their long investment horizons, are among those
with the money and domestic credentials to take
a run at BlackBerry.
Legal experts say any deal taking BlackBerry
private would work best if it had Canadian
involvement, given Ottawa's reviews of big
takeovers for competitive and national security
reasons.
"There is little question that the federal
government would prefer a made-in-Canada
approach," said Subrata Bhattacharjee, co-chair
of the national trade and competition group at
the Heenan Blaikie law firm in Toronto.
"A foreign strategic investor would certainly have
to consider some very significant regulatory
issues, including domestic and foreign antitrust
concerns ... Some foreign investors might also
have to address national security concerns,"
Bhattacharjee said.
BlackBerry said board member Timothy Dattels,
a former investment banker and Goldman Sachs
executive, will chair the new committee, which
will also include BlackBerry Chief Executive
Thorsten Heins.
Dattels is a senior partner at private equity firm
TPG Capital and a former top investment banker
at Goldman Sachs. His appointment to
BlackBerry's board in June last year sparked a
flurry of speculation that the company might
consider a leveraged buyout or going private.
BlackBerry's new line of devices hit store shelves
this year just as the high-end smartphone
segment was showing signs of saturation in
markets like the United States. Samsung
Electronics Co Ltd recently reported results that
fell shy of expectations, while Apple earlier this
year reported its first quarterly profit decline in
more than a decade.
On the mid- to low end of the market,
competition is growing intense, with Chinese
manufacturers such as Huawei Technologies and
ZTE gaining ground.
http://mobile.reuters.com/article/idUSBRE97B0CH20130812?irpc=932

Is this the end for blackberry users?. . Only time will tell

didnt xpect any less, when i saw d q10's bulk of a phn in dis age n time, n lack of sleek features to sway heads, i smh