BlackBerry Ltd. said it’s considering putting itself up for sale, the strongest indication yet that the smartphone maker won’t remain independent as competition erodes sales and hammers its stock price.
A special board committee will consider ways to enhance BlackBerry’s value and scale, including joint ventures, partnerships or a sale of the company, according to a statement today. JPMorgan Chase & Co. will serve as its financial adviser. BlackBerry shares gained as much as 9.1 percent in New York.

The announcement builds on a move last year when BlackBerry hired JPMorgan and RBC Capital Markets to advise the company on strategic alternatives. At the time, Chief Executive Officer Thorsten Heins said a sale wasn’t the “main direction” he was considering. Prospects have worsened since then, with the new BlackBerry 10 -- the linchpin of a turnaround strategy -- meeting scant demand.

“What BlackBerry is doing is the appropriate course of action,” said Charlie Wolf, an analyst with Needham & Co. in New York who has the equivalent of a sell rating on the stock. The likelihood of a sale is at least 50 percent, he said. “The other options, much less likely.”

Heins will join fellow board members Timothy Dattels, Barbara Stymiest, Richard Lynch and Bert Nordberg. Fairfax Financial CEO Prem Watsa, whose firm is BlackBerry’s largest shareholder, will step down from the board to avoid conflicts that might arise from the discussions.

'Right Time'

“Given the importance and strength of our technology, and the evolving industry and competitive landscape, we believe that now is the right time to explore strategic alternatives,” Dattels, a TPG Capital executive who will serve as the committee’s chairman, said in the statement.
BlackBerry was trading at $10.31 at 9:44 a.m. New York time, a 5.6 percent gain, after climbing as high as $10.65 earlier in the session. The surge followed a 5.7 percent rise on Aug. 9, the previous trading day, when Reuters reported that the company was considering going private.
Heins and the board are coming around to the idea that going private would give them the leeway to fix problems out of the public view, Reuters reported, citing unidentified sources. Prior to Aug. 9, the stock had tumbled 22 percent this year.
Canada Pension Plan Investment Board CEO Mark Wiseman said last week he would consider an investment in BlackBerry if the smartphone maker decided to go private.
“It’s safe to say that any large deal in Canada or elsewhere is something that we would make sure we took a hard look at,” Wiseman said in an interview. “You could say that about that asset.”
Silver Lake
Before Heins became CEO in January 2012, the company held talks with private-equity firm Silver Lake Management LLC about possibly going private, a person familiar with the discussions told Bloomberg News last year.
The talks were preliminary and the two sides weren’t able to agree on a potential valuation, the person said. Silver Lake has had no meetings with BlackBerry in the past year, a person familiar with past discussions said last week.
BlackBerry fired 5,000 workers last year as part of a plan to eliminate $1 billion in operating costs. Analysts had expected the cutbacks to help the company post a profit last quarter. Instead, BlackBerry lost $84 million, dragged down by the lackluster sales of the BlackBerry Z10. The new touch-screen phone, introduced at a lavish event in New York in January, missed estimates by almost a million units last quarter. The company is projecting another loss for the current period.
Seeking Partners
Last month, Heins reiterated that the company was seeking partners to expand the footprint of its BlackBerry 10 operating system and help with its turnaround. After pioneering the smartphone market, the company has struggled to compete with Apple Inc. and Samsung Electronics Co. in recent years, dragging its market share down below 3 percent.
“We will do our homework and assess what we think is best for the company and then we will have discussions and they will either yield partnerships, alliances or not,” Heins told shareholders in July at BlackBerry’s annual meeting in Waterloo.
Skadden, Arps, Slate, Meagher & Flom LLP and Torys LLP will provide legal counsel as the board considers its options, according to today’s statement.
While BlackBerry has a good lineup of products, its latest smartphones were released too late to compete with the iPhone and devices running Google Inc.’s Android operating system, said Needham’s Wolf. That’s turned its recovery plan into an uphill battle, he said.
“The ‘reinvention,’ if you will, has been a dramatic disappointment,” he said.

Thorsten Heins, President and Chief Executive Officer of BlackBerry, added, “We continue to see compelling long-term opportunities for BlackBerry 10, we have exceptional technology that customers are embracing, we have a strong balance sheet and we are pleased with the progress that has been made in our transition. As the Special Committee focuses on exploring alternatives, we will be continuing with our strategy of reducing cost, driving efficiency and accelerating the deployment of BES 10, as well as driving adoption of BlackBerry 10 smartphones, launching the multi-platform BBM social messaging service, and pursuing mobile computing opportunities by leveraging the secure and reliable BlackBerry Global Data Network.”

On 2013-08-13 18:35:23, Dups! wrote:
Aaah well, the Q10 will be my friend for many years while I try to get used to the full-touch phones. As it is, I am forcing myself to like the touch only S4. I am just too old-school, I guess.

On 2013-08-14 17:18:21, Dups! wrote:
I wish I was as optimistic as you, Supa_Fly, but I no longer am when it comes to BlackBerry. They have left a bit too late I feel.

If they manage to pull themselves out of this I'll be the happiest cause I'll be getting my favourite QWERTY keypad.

BUSINESS August 21, 2013 at 12:25 PM
With BlackBerry getting desperate, a new report claims that a breakup may be inevitable at this point. BlackBerry is beyond difficult to value right now but according to some industry watchers, any remaining value plummeted when BlackBerry announced it is exploring a possible sale. ”You’re effectively killing that business by saying ‘I’m up for sale,’ ” Red Sky Capital Management’s Brian Huen told Bloomberg on Wednesday. “Nobody is interested in buying the entire entity. I think they are now in the phase of saying, ‘We will do anything to maximize value, including breaking up the company.’ “

Analysts at Raymond James and BMO agree that a breakup is likely coming, and they don’t expect BlackBerry’s struggling smartphone business to make it out alive.

“The phone unit, BlackBerry’s biggest source of revenue, is essentially worthless because most buyers would shut it down in favor of their own technology, at a cost of as much as $800 million, said analysts at Raymond James Ltd. and BMO Capital Markets,” Bloomberg’s Hugo Miller wrote. “Its patents, software and a secure network are each worth more than $1 billion, the analysts said, and the company has about $2.8 billion in cash.”

Earlier reports suggested that there is still much more value left in BlackBerry and the huge discrepancies among analysts can likely be attributed to the fact that BlackBerry is currently next to impossible to value.