AH Tech Talk: BlackBerry Committee Formed To "Explore Strategic Alternatives" Meaning Find A Buyer

There was a time when BlackBerry was the only real option when it came to smartphones. Built on a platform of secure email and quick messaging, the company formerly known as Research In Motion used to dominate the market. Times change, and that is no longer the situation.

BlackBerry has formed a special committee to "explore strategic alternatives" moving forward. That roughly translates as BlackBerry is looking for a buyer. The future of the Ontario, Canada-based company is up in the air. The strategic alternatives exploratory committee will be looking for a partner to buy a majority share, or just to outright purchase the company and take things over completely.

BlackBerry not only has its smartphone division, but it also handles secure email for governments and corporations around the world. In addition, the company's patent holdings are vast and present a tempting purchase to would-be buyers.

BlackBerry has been falling further and further behind its competitors in recent years. As recently at 2009, BlackBerry was king of the smartphone game. They held 50% of the overall smartphone market share in 2009. Today, that has fallen to less than 3%. There was hope that the new BB10 operating system, and new devices like the all touchscreen Z10, would rekindle consumer interest in BlackBerry. It appears that these efforts were too little, too late. Competitors like Android continue to beat BlackBerry. Windows Phone has even bumped BlackBerry from the number three spot in global market share.

The company has been sinking for a while. Both of the company's CEOs, Jime Balsillie and Mike Lazaridis, stepped down at the beginning of 2012. Balsillie even resigned from the BlackBerry board of directors in 2012. In March of this year, Lazaridis followed Balsillie and resigned as the vice chairman of the board.

BB10 devices are not selling anywhere near what BlackBerry had hoped. The company basically pinned all of its success on the updated platform, but sales are flat and the company is floundering. The special committee that was announced today will need to weigh all options. A joint venture or partnership is not out of the question. An outright sale may be preferable if the company hopes to turn things around and return to prominence in the smartphone market place. The vision of the current management and board of directors is obviously not working.

I was a die-hard BlackBerry fanatic before getting my first Android device in 2008.  It's sad to see how much the company has fallen in the past few years. BlackBerry still makes the best hardware keyboard available, in my opinion. Unfortunately, they have not been able to keep up with the software platforms that Android, as well as iOS, has provided for consumers. BB10 came to market too late. Consumers were already hooked on the quality touchscreen operating systems that were available. BB10 is a decent OS, but it is too little, too late.

Here is the full press release concerning this morning's announcement. What do think? Can someone purchase BlackBerry and finally turn things around? Or will someone buy the company for their patents and then shut things down?

 

WATERLOO, ONTARIO--(Marketwired - Aug. 12, 2013) - BlackBerry Limited (NASDAQ:BBRY)(TSX:BB), a world leader in the mobile communications market, today announced that the Company's Board of Directors has formed a Special Committee to explore strategic alternatives to enhance value and increase scale in order to accelerate BlackBerry 10 deployment. These alternatives could include, among others, possible joint ventures, strategic partnerships or alliances, a sale of the Company or other possible transactions.

The Special Committee of the Board is comprised of Barbara Stymiest, Thorsten Heins, Richard Lynch and Bert Nordberg, and will be chaired by Timothy Dattels.

With the announcement of the Special Committee, Prem Watsa, Chairman and CEO of Fairfax Financial informed the Company that he felt it was appropriate to resign due to potential conflicts that may arise during the process. Fairfax Financial is the largest BlackBerry shareholder. Mr. Watsa said, "I continue to be a strong supporter of the Company, the Board and Management as they move forward during this process, and Fairfax Financial has no current intention of selling its shares."

"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," said Timothy Dattels, Chairman of BlackBerry's Special Committee of the Board. "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."

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."

JP Morgan Securities LLC is serving as financial advisor to BlackBerry and Skadden, Arps, Slate, Meagher & Flom LLP and Torys LLP are serving as legal advisors.

There can be no assurance that this exploration process will result in any transaction. The Company does not currently intend to disclose further developments with respect to this process, unless and until its Board of Directors approves a specific transaction or otherwise concludes the review of strategic alternatives.

About BlackBerry

A global leader in wireless innovation, BlackBerry® revolutionized the mobile industry when it was introduced in 1999. Today, BlackBerry aims to inspire the success of our millions of customers around the world by continuously pushing the boundaries of mobile experiences. Founded in 1984 and based in Waterloo, Ontario, BlackBerry operates offices in North America, Europe, Asia Pacific and Latin America. For more information, visit www.blackberry.com.

This news release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities laws, including statements regarding: BlackBerry's expectations regarding new product initiatives and timing, including the BlackBerry 10 platform; BlackBerry's plans and expectations regarding new service offerings, and assumptions regarding its service revenue model; BlackBerry's plans, strategies and objectives, and the anticipated opportunities and challenges in fiscal 2014; anticipated demand for, and BlackBerry's plans and expectations relating to, programs to drive sell-through of the Company's BlackBerry 7 and 10 smartphones and BlackBerry PlayBook tablets; BlackBerry's expectations regarding financial results for the second quarter of fiscal 2014; BlackBerry's expectations with respect to the sufficiency of its financial resources; BlackBerry's ongoing efforts to streamline its operations and its expectations relating to the benefits of its Cost Optimization and Resource Efficiency ("CORE") program and similar strategies; BlackBerry's plans and expectations regarding marketing and promotional programs; and BlackBerry's estimates of purchase obligations and other contractual commitments. The terms and phrases "expects", "believe", "focused", "getting", "opportunities", "we are seeing", "continuing", "drive", "improve", "should", "will", "increasing", "anticipated", and similar terms and phrases are intended to identify these forward-looking statements. Forward-looking statements are based on estimates and assumptions made by BlackBerry in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that BlackBerry believes are appropriate in the circumstances, including but not limited to the launch timing and success of products based on the BlackBerry 10 platform, general economic conditions, product pricing levels and competitive intensity, supply constraints, BlackBerry's expectations regarding its business, strategy, opportunities and prospects, including its ability to implement meaningful changes to address its business challenges, and BlackBerry's expectations regarding the cash flow generation of its business.
Many factors could cause BlackBerry's actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including, without limitation: BlackBerry's ability to enhance its current products and services, or develop new products and services in a timely manner or at competitive prices, including risks related to new product introductions; risks related to BlackBerry's ability to mitigate the impact of the anticipated decline in BlackBerry's infrastructure access fees on its consolidated revenue by developing an integrated services and software offering; intense competition, rapid change and significant strategic alliances within BlackBerry's industry; BlackBerry's reliance on carrier partners and distributors; risks associated with BlackBerry's foreign operations, including risks related to recent political and economic developments in Venezuela and the impact of foreign currency restrictions; risks relating to network disruptions and other business interruptions, including costs, potential liabilities, lost revenues and reputational damage associated with service interruptions; risks related to BlackBerry's ability to implement and to realize the anticipated benefits of its CORE program; BlackBerry's ability to maintain or increase its cash balance; security risks; BlackBerry's ability to attract and retain key personnel; risks related to intellectual property rights; BlackBerry's ability to expand and manage BlackBerry® Worldâ„¢; risks related to the collection, storage, transmission, use and disclosure of confidential and personal information; BlackBerry's ability to manage inventory and asset risk; BlackBerry's reliance on suppliers of functional components for its products and risks relating to its supply chain; BlackBerry's ability to obtain rights to use software or components supplied by third parties; BlackBerry's ability to successfully maintain and enhance its brand; risks related to government regulations, including regulations relating to encryption technology; BlackBerry's ability to continue to adapt to recent board and management changes and headcount reductions; reliance on strategic alliances with third-party network infrastructure developers, software platform vendors and service platform vendors;
BlackBerry's reliance on third-party manufacturers; potential defects and vulnerabilities in BlackBerry's products; risks related to litigation, including litigation claims arising from BlackBerry's practice of providing forward-looking guidance; potential charges relating to the impairment of intangible assets recorded on BlackBerry's balance sheet; risks as a result of actions of activist shareholders; government regulation of wireless spectrum and radio frequencies; risks related to economic and geopolitical conditions; risks associated with acquisitions; foreign exchange risks; and difficulties in forecasting BlackBerry's financial results given the rapid technological changes, evolving industry standards, intense competition and short product life cycles that characterize the wireless communications industry. These risk factors and others relating to BlackBerry are discussed in greater detail in the "Risk Factors" section of BlackBerry's Annual Information Form, which is included in its Annual Report on Form 40-F and the "Cautionary Note Regarding Forward-Looking Statements" section of BlackBerry's MD&A (copies of which filings may be obtained at www.sedar.com or www.sec.gov). These factors should be considered carefully, and readers should not place undue reliance on BlackBerry's forward-looking statements. BlackBerry has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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About the Author

Jeremiah Nelson

Staff Writer / Podcast Host
Jeremiah Nelson has loved Android since the OG Moto DROID. He spends his free time listening to metal and flashing new ROMs.
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