This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: Selling BlackBerry Will Be Just As Hard As Selling BlackBerrys

NEW YORK (The Deal) As Prem Watsa's Fairfax Financial Holdings  reportedly tries to line up support to take BlackBerry (BBRY - Get Report) private, industry watchers are questioning whether anything about the once-dominant mobile device maker is worth saving. 

Media reports suggest that Fairfax, which has a 9.89% stake in the Waterloo, Ontario-based company, is talking to the Canada Pension Plan Investment Board about a bid. 

But while Silver Lake Partners and Michael Dell might have a plan for Dell (DELL), it's hard to see what Fairfax will do, other than keep a Canadian company, with its 10,000-plus jobs, in business and in Commonwealth hands. 

When BlackBerry said on Aug. 12 that it had hired JPMorgan Chase (JPM) and law firms Skadden, Arps, Slate, Meagher & Flom and Torys for help in reviewing alternatives, it also said that Watsa was stepping down from the board because of "potential conflicts." 

Must Read: The Deal: Roche Cuts Deal With Inovio for Cancer, Hep B Therapies

Fairfax and BlackBerry have been talking since then, according to a person familiar with the situation. A BlackBerry spokeswoman refused to confirm that, saying the company didn't comment on speculation. Fairfax didn't return calls seeking comment. 

Industry experts say that, as of now, BlackBerry's board is focusing on a sale of the entire company. Specifically, these people say, BlackBerry has not tried to separately peddle its approximately 5,000 patents. But that could change if no other workable option emerges. 

In fact, one industry source said that bankers had tried to determine what the company's IP might be worth to strategic acquirers and/or patent holding firms. 

The most obvious indicator of BlackBerry's decline is its share of the smartphone market, or rather lack of share, and one that is still on a steady slope downward. As of July, Google's (GOOG) Android operating system led off with a solid 51.1%, Apple's (AAPL) iOS captured 43.4%, with Microsoft (MSFT) pulling a distant third at 3.5% and BlackBerry barely nudging the needle at 1.2%, according to data released in September by Kantar Worldpanel ComTech. 

Or, as one observer succinctly put it, BlackBerry's business is "falling off a cliff." 

The results of the decline are well-documented. Two years ago, the company's shares were trading at about $30. Their recent 60-day moving average sits at around $11.50 per share. At the beginning of 2012, co-founders Mike Lazaridis and Jim Balsillie were pushed out of the company. 

BlackBerry's board arguably compounded the problems by sticking with its independent status and promotinig head of products development Thorsten Heins to the top slot rather than seek an outsider. The new chief presided over the release of the BlackBerry 10 to thunderous indifference. 

As Jefferies  analyst Peter Misek wrote in an Aug. 19 research note, "We have been highlighting that developed market smartphone markets are saturated leading to decelerating shipments and pricing pressure...We had thought that BBRY's small BB10 shipment amount (<10% of APPL's) would allow it to buck this trend, but it failed to do so. Overall, we continue to believe there is excess inventory of high-end smartphones and weak demand." 

Misek had a $15 target on the stock at the time. 

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BBRY $6.75 -0.15%
AAPL $93.17 -0.48%
FB $118.51 0.38%
GOOG $700.13 0.64%
TSLA $215.68 -3.10%


Chart of I:DJI
DOW 17,706.91 +55.65 0.32%
S&P 500 2,056.95 +5.83 0.28%
NASDAQ 4,737.2170 +11.5780 0.24%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs