Tech pioneer BlackBerry made a last roll of the dice on Monday and agreed to a probable US$4.7 billion buyout by a consortium planning to take the struggling smartphone maker private.
BlackBerry was once a leader in mobile tech, but has been squeezed by rivals Android and Apple Inc, which coincidentally announced record sales of its latest iPhone on Monday.
The Ontario-based company said it had signed a letter of intent with a group led by Fairfax Financial Holdings Limited, which has offered to acquire the company.
Photo: Bloomberg
Fairfax, a Canadian firm headed by billionaire Prem Watsa, is already BlackBerry’s largest shareholder with approximately 10 percent of its shares.
Watsa resigned from BlackBerry’s board last month when it announced a search for a suitor.
Watsa said the sale “will open an exciting new private chapter for BlackBerry, its customers, carriers and employees.”
“We can deliver immediate value to shareholders while we continue the execution of a long-term strategy in a private company,” he said.
Ironically, the announcement came on the same day Apple said it sold a record 9 million iPhones in three days after launching two new versions of its smartphone last week.
Under the proposed BlackBerry-Fairfax deal, the consortium would offer US$9 for each outstanding share and Fairfax would contribute its own shares in the transaction. BlackBerry said its board supports the plan.
A firm deal, once due diligence is completed, is expected by Nov. 4. It also hinges on the consortium obtaining financing.
BlackBerry said it would continue a search for a possibly better suitor in the interim.
BlackBerry stock was down 6 percent to US$8.23 before trading was halted just prior to its announcement. Its shares bounced back in afternoon trading to close at US$9.08, but remain far below the stock’s historical high.
Analysts reacted with measured optimism.
“This is probably the best possible outcome of several unattractive options for BlackBerry,” said J. Gold Associates analyst Jack Gold said.
While BlackBerry helped create a culture of mobile users glued to smartphones, many have since moved to iPhones or devices using Android software like Samsung’s Galaxy range.
According to International Data Corp, BlackBerry’s global market share had slipped to 3.7 percent in the second quarter, the lowest since tracking began. Android accounts for nearly 80 percent.
For Roger Kay at Endpoint Technologies Associates, BlackBerry grew complacent and was “blinded” to competitive threats.
“BlackBerry hung its hat on the physical keyboard, they believed that for people who do a lot of typing they need a keyboard,” Kay said. “By the time it got the touchscreen it was too late. In this industry if you miss a couple of product cycles, you’re pretty much toast.”
The company, formerly known as Research In Motion, unveiled a new corporate name and a new platform in January as it sought to regain momentum, but its most recent numbers suggest this has been a spectacular failure.
Gold and other analysts said going private — and possibly returning company founder Mike Lazaridis to the helm — would give the firm room to “put the house in order.”
Going forward, BlackBerry would be a much smaller player in handheld devices, but Gold said “being private would mean Wall Street is not continuously breathing down their neck.”
Furthermore, its key enterprise customers may not feel compelled to replace their BlackBerry servers for fear that the company is going out of business.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure