BlackBerry considers selling itself to revive ailing fortunes
BlackBerry will consider selling itself after the long-awaited debut of its new phones failed to turn around the struggling smartphone maker.
The company said yesterday that its board had formed a special committee to explore "strategic alternatives" in hopes of enhancing the company's value and boosting adoption of its BlackBerry 10 platform.
The company said its options could also include joint ventures, partnerships or other moves.
The Canadian company's stock jumped 5.2 per cent to US$10.26 in midday trading yesterday.
The BlackBerry, pioneered in 1999, had been the dominant smartphone for on-the-go business people and other consumers before Apple unveiled the iPhone in 2007 and showed that phones can handle much more than e-mail and phone calls. The company has since been hammered by competition from the iPhone as well as Android-based rivals. In January, the company unveiled new phones running a revamped operating system called BlackBerry 10 designed to better compete. But its market share continues to lag, and the company warned in June of future losses.
Mike Walkley from Canaccord Genuity said sales were getting worse even with lower prices.
"Now they have to go to the next step of what's best for the company and shareholders to survive long term because it doesn't look promising on BlackBerry 10 sales," Walkley said.
Yesterday's announcement marks the second time BlackBerry has said it has hired bankers to help weigh its options since Thorsten Heins became CEO in early 2012. The company faced numerous delays modernising its operating system with the BlackBerry 10. During that time, it had to cut more than 5,000 jobs, and shareholder wealth declined by more than US$70 billion.
Heins had said then he was not actively looking to sell BlackBerry, but wanted to be prepared given the challenging environment.
BlackBerry also announced yesterday that board member Prem Watsa, the company's largest investor with a 9.9 per cent stake, had resigned from the board "due to potential conflicts that may arise during the process". Watsa, who could be a bidder, believes BlackBerry can turn itself around.
BGC Financial analyst Colin Gillis said he doesn't see Canadian or US regulators allowing BlackBerry to be owned by a Chinese company. Major clients like the US Department of Defence would abandon the company, he said. "Its core reputation for security would fall apart really fast," Gillis said.