Blackberry Goes Private
It finally happened.
After months of limping along, Blackberry (formerly known as RIMM) succumbed to the pressures of the market, and agreed in principal to be purchased by the Canadian insurer Fairfax Financial. The chairman of Fairfax Financial, Prem Watsa, had withdrawn from the Board of Directors of Blackberry several months ago in order to avoid any potential conflicts of interest in the event of a buyout of the Canadian phone maker. The man is often referred to as the “Warren Buffet of Canada,” and his firm is known for their value investing strategy similar to how Berkshire Hathaway makes its investment decisions.
Covered in more detail in an earlier post found here: http://ssteinsmith.com/2013/08/14/why-go-private-blackberry-dell/ – this story has an additional of complexity that did not at first make the major headlines: the fact that the firm was considered a national source of pride.
Additionally now that Blackberry had agreed to, in principle, to be taken private there are several options that the struggling firm can take.
1) Sell off its handset operations to a firm like Lenovo that desires to enter the smartphone market.
2) Monetize its patent portfolio, which is worth in excess of $1 billion.
3) Focus exclusively on governmental and “sensitive” data clients
a.Although in the face of declining consumer demand it would be interesting to see the rationale behind why firms would use a product that consumers will not buy.
4) Become a software only, enterprise-like service provider utilizing its new O.S.
5) Attempt to develop products/services that can run on Android, the mobile O.S. that controls near 80% of global market share.
Whatever course of action, or combination of actions, occurs, it certainly will be interesting.