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News & Rumors

Bert Nordberg stepping down from BlackBerry board next month

News & Rumors

Prominent investment group Kahn Brothers increase stake in BlackBerry by 80%

< >

BlackBerry and Fairfax: What happens now?

By Chris Umiastowski on 25 Sep 2013 11:17 am EDT
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For obvious reasons we’ve been covering the story of BlackBerry and Fairfax quite hard this week. When the news broke on Monday I wrote up my initial thoughts in this editorial and I thought it would be worth coming back today with some additional thoughts and details. There are a lot of questions from all of you, and there is a lot of misunderstanding about how the markets work, which I’ll also touch on.

First a quick recap:  Fairfax Financial filed a letter of intent to take BlackBerry private at $9 US per share. As many of you noticed, this is not the same as a firm offer since it’s conditional on the insurance giant arranging financing and six weeks of due diligence. During this time BlackBerry is free to shop themselves to others and find a better offer for shareholders. If that happens, Prem Watsa and his group of investors can match the bid or walk away.

If you want to understand more about this from a professional investment banker, I can’t give enough recommendations for Mark McQueen’s awesome blog post. Go read it. Mark is an incredibly smart Bay Street professional, and a guy I’ve had the pleasure of working with for several years at Yorkton Securities, where he lead the tech investment banking team. You won’t find too many guys with his level of expertise and familiarity with BlackBerry willing to write publicly about this proposed deal.

Make no mistake, this bid is NOT going higher by Fairfax unless someone else steps in to force it up

I made my opinion pretty clear on Monday. $9 is a crap bid for all of BlackBerry’s assets. Make no mistake, this bid is NOT going higher by Fairfax unless someone else steps in to force it up. But if that happens, which I doubt, I think Fairfax would happily take their break fee and walk away. As McQueen posted in the above blog, the BlackBerry board has already signaled that it’s willing to sell for about $9.

No business person offers any more than they need to offer to get a deal accepted, and if BlackBerry is willing to settle at $9 it speaks volumes as to the situation they feel they’re stuck in.

Many of you have suggested there is a conspiracy, and that the timing of Friday’s layoffs + earnings warning + inventory write down is just too suspicious. Yeah, it is suspicious and I’m sure class action lawyers will be all over it. I’m sure it is possible that the BlackBerry team came to a recent decision that going private was its best option, and decided to air all of its bad news to accelerate a possible offer. It’s impossible to crucify a company for publicly announcing bad news. If there was another buyer ready to make an offer they’d have done so. Or another buyer will surface before November 4th. If nobody comes forward and this is the only offer, then we can’t blame the board for accepting a crap offer.

For those thinking I’m sugar coating the situation, sorry folks ... it’s just the way things are. Whether or not you believe the board did a good job running the company is a totally different discussion, and unrelated to the current M&A scenario we’re facing.

Another popular questions was, “Can shareholders reject this offer?” Yes, of course they can. Shareholder approval is required for a go private transaction. Just hit up Google for news about Dell’s privatization and you’ll see nearly 70% of shareholders voted to accept the deal. That’s what happens when the deal is viewed as fair.

Another popular questions was, “Can shareholders reject this offer?” Yes, of course they can

If a firm deal ends up being tabled at $9 I suspect there is no way it can fail. If shareholders think it’s a low bid, they should ask themselves why nobody else is willing to pay more. Look at BlackBerry’s stock today. It’s trading at $8.18 as I type, and that’s a very clear indication that shareholders don’t believe a better offer is coming, and they furthermore believe Fairfax may lower it’s offer.

Many of you are also curious what Fairfax will do with the company should they become the new owners. In truth, they could do anything they want. They could chop it up and sell of pieces. They could cut R&D and SG&A to the bone and milk the cash flow out of the service business over the next few years and then sell off the patents. They could raise new capital and make a big gun attempt at resurrecting market share. Anything is possible, and I’m not claiming I can read Prem Watsa’s mind. But it does seem clear from his public comments that he believes they can survive as a niche player in the enterprise market. I’d like to see them take the written-off Z10 inventory and seed those devices into the enterprise to grow the BlackBerry 10 and BES 10 base.

Friday morning the company will announced its quarterly results. We’ll find out a bit more about the good, the bad, and the ugly. We’ll hear from Thorsten Heins, and we’ll keep following the story for all of you. Stay tuned. Post any additional questions in the comments. I’m reading them and I’ll use them in followups.

258 comments

Hup55

First

Posted via CB10

QuIcKsIlV3r

Glad you didn't even read the article.....

Dzyen

Or maybe he did with his lightning quick Z10 ;)

Posted via CB10

Anonymous2039

His phone doesn't change how fast he can read.

--Q10 and Canadian all the way! Posted via CB10 on 10.2.0.1443. #IChooseBlackBerry10

the_igg

Anti joke chicken

Posted via CB10

Mr.mister

You Must be fun at parties!

Posted via CB10

NotGoodIMO

All the posts in the 'first' thread are useless, including mine and the once following it.

BBPandy

Wait, are you saying my post is useless! :mad
lol....yea it is :P

Posted via CB10

Hassan00

Let's wait and see Watsa gonna happen.

SavvyBB

Haha, nice one! :)

Posted via CB10

shootsscores

First thing? Fire the entire marketing department for their epic ineptitude.

QuIcKsIlV3r

no, No, NO... no first thing... you failed at being first and anyone posting first FAILS!!!

GiantSchnauzer

And apparently fist smartphone company can fail as well....

Z10 Rocking 10.2

mrfreeze574

Uh.. That's not what he was claiming.. Dee da dee.

The_Adventist

QuIcKsIlV3r, you're too quick.

This time YOU fail.

Chris Umiastowski

No argument here.

Posted via CB10

BBThemes

would you say fire the CEO who hasn't said a word even though there have been all these announcements of redundancies, privatisation, a Z30 launch and BBM cross platform issues?

Maybe its just me, but as they are (currently) a public company, I think he should be out there addressing things - heck Mike L even did a video when BIS failed for a few days.

And I know people will say `well we will hear from him on the earnings call` but that doesn't mask his absence from what are undeniably pivotal moments for BlackBerry over the last few weeks.

jr4941

Yes!
Also, I watched the Z30 video here: http://us.blackberry.com/smartphones/blackberry-z30.html?IID=us:bb:deskt...

I think they finally did a video in an attempt to differentiate it from competitors. Why did it take so long?

Anonymous2039

"Forbidden. You don't have permission to access."

--Q10 and Canadian all the way! Posted via CB10 on 10.2.0.1443. #IChooseBlackBerry10

Playbook007

Awesome....
Sold as soon as it arrives!

BlackBerry will survive in the Corporate and Government Sectors! My Z10 is so much better than an iphone!

BlueHeel

Ummm...this video was released on the day the Z30 was released in Malaysia. it was posted right here on CrackBerry. The question, thus, should be, "Why did it take so long for you to see it?" Makes it seem that you are just looking for something to complain about.

Posted via CB10

laketrout73

We'll hear from him at the earnings call this week but don't expect hear anything except vague comments about the company's direction.

We won't know for sure what direction the company will take until new owners are in place and most likely a new CEO.

NotGoodIMO

Absolutely agree, they need to fire the CEO and get someone from outside, hopefully from the states. The main problem right now is that there is no confidence in this management. Blackberry has good assets and this thing can turn around but it certainly need change of leadership.

tpmendes

I could not agree more! I found the way CEO lead the Playbook ending a complete disaster! Even if the strategy was good, which I do not agree, the way they implemented it was even more painfull for the BB PB fans! Myself ended aborting to buy Z10 as soon as I got the confirmation PB was dead after all.... Albeit I still see potential in BB smartphones and the tablet... but having a CEO considering the tablet market is dead...

kjhawkman

I think he was too busy too busy taking care if his real interests selling off a pile of vested stock moments before his bad news announcements... http://www.reuters.com/article/2013/09/24/us-blackberry-offer-stock-idUS...
Or I suppose this happened by coincidence as well.....its automatic...to pay there taxes..... Man I wish could do that.
I wonder how the 4500 unemployed people will mange there taxes?
Right or wrong its just another thing that looks and smells bad.
BB needed a CEO devoted to design and innovation not just about making money for himself. Just my feelings....

iwannalearn2001

Shocking.... thats all I have to say. Round them up in court.

NotGoodIMO

Heinz has made mockery of once great company. He is now busy hiding somewhere. The guy doesn't even have guts to come out and accept his mistakes. More than anything, I don't trust this management. I think they are manipulating everything for their own good. It's one thing to tolerate incompetent and stupid people but crooks are harder to deal with and that's exactly what this management team is. Too bad I really like BB10.

Grizzli

Yup, every single last person in PR and Marketing. I'd go a step further and burn all their desks, computers, papers, materials, the servers their files are stored,.. anything they have ever touched. Then, they can 100% outsource all their PR and Marketing.

I suspect textbooks for decades to come will use BBRY as an example of the worst PR/Marketing in human history.

iwasspartacus

Don't forget the Product Managers, Executive Team, HR Recruiters and the extremely useless governance of the BOD.

All guilty of destroying billions of dollars of wealth.

Posted via CB10

BoyAndroid

If you think the current management are single handedly responsible for the current state of things I think you are delluding yourself. Their problems started years ago, and I for one think they have been on a one way course to this destination for some time. The current management/staff/products could only do so much.
Their problems started when they refused to develop a more up to date user interface and experience, when everyone else around them was doing great things with touch interface. They lost touch with the market in a big way and thought that relative 'newcomers' wouldn't be able to change the shape of the market in any significant way, but they were wrong, and refused to acknowledge this fact for way too long.

Current marketing/product managers and management can only do so much...

edriss

Some things are better outsourced than in house.

Marketing could be in house but ONLY AS A liaison for BlackBerry and marketing company. Especially since pr and marketing is so integral in selling stuff

Posted from CB10 via Zed10.

mauro316

I'm not going to give an opinion based on what could Premier do or not do. I'll just go by what the press release stated a few days back and his own words.

- BlackBerry signed a letter of intent: this means the board is pretty much OK with the $9 a share price.

- The board acted on the recommendation of the special committed. Meaning they found no better option in their months of research or to put it in other words: Noone else wants BlackBerry.

- That being said, it looks as if they are just starting their "go-shop" process, so they might have been exploring other options.

- Prem Watsa stated that this will "open an exciting chapter for BlackBerry, it's CUSTOMERS, CARRIERS and employees". That does not sound as if the company will be chopped in pieces.
"While we continue execution of a LONG TERM strategy in a private company". Looks like he is planning on keeping it together at least for a few years right?

Stated on a press release previous to the Fairfax announcement:

- BlackBerry said that the "Company to refocus on enterprise and prosumer market, offering end to end solutions, including hardware, software and services.". Looks like their "prosumer refocus" will be halted for a while since that may not be the opinion of Prem as stated previously on what he said.

To sum it up, I guess things will stay BAU in regards to what we care about: phones being produced. Regarding the marketing, that may be refocus to the enterprise customers only, leaving the common end user out of the picture, I would be a mistake but that's just my opinion.

Posted via CB10

mauro316

Premier = Prem ;)

Posted via CB10

qwerty4ever

Geez. Just get down on your knees and suck on your Indian God already. Prem is not going to save BlackBerry and restore it as an industry leader. He is a vulture, not a beaver.

Posted via CB10 from the BlackBerry Z10

allwi

I hope you're right - and I believe that going private is the only chance for BlackBerry to survive.

Let's hope that Icahnn becomes interested in the next days: this would be the end of all rumours what would happen as it would be clear that he will chop, milk and sell.

TBone4eva

Firing everyone sounds good, but how are you going to convince other people to fill the spots, especially the CMO. Money talks, but you'd be a fool to leave a successful company right now and come to BlackBerry on a chance.

Grizzli

That's why we were talking about outsourcing marketing and PR. : ). ... though for me it's more about keeping it as far away from BBRY as possible since they've never got it right.... ever.

sleekmustang

Agreed, a big part of their problems other than apps is marketing

birdman_38

Actually, it's the biggest part.

edriss

Agreed. Marketing sucks! They do as a good job as I think I could pull off if I really tried. That's a horrible thing hahaha

Posted from CB10 via Zed10.

Himanshu Mehta

Fairfax will make good of bbm, cheers :)

Posted via CB10

Plazmic Flame

If they are going to wait until the deal goes through in November to release X-BBM, they can all take a flying leap!!!

thisiscjay

I thought about this, but I don't think it is likely

Skeevecr

All these conspiracy theories about bbm just seem a bit silly, if the version that leaked is a lot noisier due to logging and other stuff, launching while that version was not yet blocked could clobber their entire network which hardly seems like a smart move.

Light_31

Thorstein, I want you to look me in the eyes When u talk.. your promising to many bells and whistles and so far nuthing but bad news. I'm so happy this company is being handed over. BlackBerry til da death baby.

From my Z10 A.K.A knight Rider.

andy957

:( So long, English grammar.

Anonymous2039

I no rite! :)

(I know, right.)

--Q10 and Canadian all the way! Posted via CB10 on 10.2.0.1443. #IChooseBlackBerry10

greenberry666

I know, right?

Fable Publishing: C0012255F

Lofti1

Do you think there is a good chance that they will divide BBM into it's own subsidiary company from Blackberry in order to provide a better BBM experience for iphone android and blackberry users? Would it be more profitable or effective if they did that?

Posted via CB10 on Q10

JWWDUKE

If there is some indication from the company that BBRY is going to survive as a company after this, I will be selling my Z10 and buying a Z30.

Posted via CBZ10 baby!

sandman61377

If/when the Z30 comes to market in the US, I'm buying it regardless of what's happening to the company. If they say it will be the last BlackBerry ever sold in the consumer market, I will most likely "ride it till the wheels fall off." And keep my Z10 against the day that happens.

Posted via CB10

iToya

Amen to that!

Posted with a flick of my thumb via CB10

Playbook007

It's like having a rare and expensive watch. The z30 is going to rock!

BlackBerry will survive in the Corporate and Government Sectors! My Z10 is so much better than an iphone!

tmommy

+1 After considerable reflection, this is the conclusion I am coming to myself.

Posted via CB10

Mary Ann Clark

Just want BlackBerry to do well.

Posted via CB10

Thebigo3d

I just want a slice of pizza..oh wait I have one. WOO HOO!

latng

Gud one!

Posted via CB10

ets5290

For all the conspiracy theories about timing of last Friday's announcement and Fairfax's offer on Monday. If BB didn't issue the guidance and held on to the news until this Friday's earnings call, what do you all think would happen to the share price? Yes, $9/share is crap but I think it could've been worse.

k8bushlover

don't forget the much-hyped and epic-failed BBM launch cross-platform on the weekend.

Anyway, it already is trading worse than $9. So I shouldn't be surprised if nobody else bites, and Fairfax lowers the offer even further. What's up with analysts continuing to set target prices well above $9?

arthursim

Can they lower their offer? I don't think so at this point.

Posted via CB10

Jonathank

Can I buy shares at 8:18 and then sell for 9? Do u think the delay of bbm had anything to do with this?

Sent from the Amazing Z10

Anonymous2039

Risky...

--Q10 and Canadian all the way! Posted via CB10 on 10.2.0.1443. #IChooseBlackBerry10

BBZ10wannabe

Yes, If you believe the $9 deal will come to fruition. buy, buy, buy !!

randall2580

You would be betting it's more likely than not either the Fairfax deal goes through or someone steps up with a better offer.

At 8.18 the market is telling you it is more likely than not that this deal will not happen.

scalemaster34

Fairfax can walk away or they can come back with a lower offer.

Stocks are a gamble, even with an offer of $9 on the Table.....

QuIcKsIlV3r

As being the BB geek of my friends and family, everyone has been asking me what this means, and I keep reading your articles Chris and citing them to my friends and family. The next 5.5 weeks are going to be interesting to see what happens. I can honestly see a hidden monster in Google or Samsung or even Apple trying to bid up BB, and gain access to the patents and then extrapolate it into their devices and then throw BB to curb.

BBVegasGirl80

:'-(

Sent from my sexy white hot Z10 in Sin City ;-)

itzJustMeh

Well Samsung definitely wouldn't just take patents and throw the rest to trash. They want their own OS, so if they bought BB, they would keep OS

abwan11

Is it plausible someone like Samsung would benefit from taking a major stake, not a outright buy? considering this could be there last shot at it.

Posted via CB10

Plazmic Flame

Really?

Hmmm, I don't see anyone bidding anything. Kinda like, "You want to buy this?? Go right ahead!"

Based on the kinds of money Google, Apple and Samsung have, buying BlackBerry would have been done way back when the shares were down to $5.

abwan11

There was a lot of big question last year, I believe they have a little more insight into where someone could take blackberry at this point.

Posted via CB10

abwan11

The reason I say stake is because the governments in NA may not look favorably at an outright sale to foreign companies like Samsung, but if they had enough IN IT to add to the BOD without outright control of things, it may be beneficial.

Posted via CB10

Playbook007

Would they legally have to accept that kind of deal? They accepted the Fairfield one, and it allows a higher offer, and Fairfield would have to up the anti, but would they have to accept a bad deal.

BlackBerry will survive in the Corporate and Government Sectors! My Z10 is so much better than an iphone!

Playbook007

Never mind, just found they do not have to accept another offer.

BlackBerry will survive in the Corporate and Government Sectors! My Z10 is so much better than an iphone!

xstatic4beer

Dump money into marketing and apps! Get rid of the spam apps and get some with purpose! Love my Z10!

Posted via CB10

danfrancisco

Thanks for another great article, Chris. I hope this privatization deal drags out over an extended period of time so that you can keep contributing to CB! You are definitely more valuable to CB than simply being "the stock guy" (per your last posting).

Can you help me better understand the break fee? My understanding is that it's at 30 cents per share. So if the deal dies, does that mean that BlackBerry has to pay Fairfax $150M?

Thanks for the insight!

Skeevecr

They only have to pay them something if somebody comes in with a higher offer.

rthonpm

Chris: Just a thought, but are there any synergistic opportunities available to BlackBerry with any of Fairfax's other holdings that could help the bottom line, or would any of these already have been explored and exploited if there was value to either company?

AnimalPak200

They can sell all those written off Z10s on overstock.com!!! How fitting.

LOL

Posted via CB10

Jouster

Here's hoping. I'll be first in line.

jgrobertson

Is Thurston toast?

Posted via CB10

Killington

Golden parachute once he is...incentive pay to sink the ship.

Bacon Munchers

When this ER drops the pants on BlackBerry again, it will make the $9 offer seem as a gift. We as shareholders loose either way.
No, I don't believe that Prem will re offer at a lower bid, but the dropped share price post ER (should it happen), will send people running for the door.

That said, I feel betrayed by the whole BlackBerry comeback, for too many reasons to rant about; most of which have been posted thus.

"Still diggin' the Z10, eh?"

Anonymous2039

You don't lose if you bought at $6 a share. A 33% profit.

--Q10 and Canadian all the way! Posted via CB10 on 10.2.0.1443. #IChooseBlackBerry10

BBwild

Even better than that Chaz95. If you bought at $6 & sold at $9, that's actually a profit of 50%...

Posted on CB10 with my Q10

onvisa

Chris nice article.
I think the board sold there soul.
They wanted Prem to buy the company and reward the board ( i'm not saying how, but you know).
Second they SHOULD have not said anything before this Friday announcement on BB.
This was to bring the stock down as much as possible so Prem could by the company for $2.7 billion dollars.
How about the BB exces. sold there shares , isn't this insider trading?
If I had a friend at Blackberry and told me that they were going to layoff 4500 people and a billion dollar loss I would be charged with insider trading even if I sold my stock same time as the exces.
I have lost all faith in Blackberry as a respectable company and yes there are monkeys at the board of directors.

agesparza

Maybe marketing isn't the problem. Until 10.2 the OS was just okay. For sure not as good as iOS and Android.. Roll out 10.2 and a few more apps and then talk marketing.....

Posted via CB10

ryanlrobinson

It depends what you want when you get into questions of how good it is compared to the competition. For me, it was the best even from the earliest 10.0 as my priorities are almost exclusively BlackBerry's strengths: communication, security, efficiency, multi-tasking. That's 90% of my use. I care little about the things that iOS and Android are good at and would not consider trading away BlackBerry's strengths for iOS' or Android's.

Marketing, then, in my opinions, could have pitched much more effectively to people like me. I'm not sure exactly how as I know little about marketing, but I have gotten the sense that they were portraying themselves as all things to all people. It's not that; it is an amazing product for a certain demographic. But that demographic doesn't know it.

LyBerry

CoSign. Look at all of the basic smartphone capabilities that it took the iPhone multiple OS upgrades to have (ie Copy and Paste) and it still sold millions and millions because of the marketing. Android was the last one to enter and now they are number one. Again, marketing is huge. BlackBerry has little marketing and you see the results. If the advertising was solid and consistent, I don't believe we'd be having these articles, blogs, and conversations now.

Posted via CB10

Giro_UK

The first task is to get the phone in people's hands, remember they're bound by contracts. So you need wow factors for recreational use, to prompt the buy!

If it's a demon for business use to then make it be known! and people will choose that phone..it will succeed

BBM craze was largely responsible for the rise in BlackBerry use among non-business users so maybe when it truly goes cross platform people will again consider a BlackBerry as it will offer the best incarnation of integration.

Selling the BlackBerry As a premium product, low volume, doesn't do anything for them, the most successful phones and companies sell en mass.

Alternatively... BBM will be taken as a product and sold leaving the real jewell in the crown that is QNX.

Perhaps though, Thorsten saw private ownership coming, which would be much needed to allow time and provide financial backing to develop the next incarnation of BlackBerry and QNX integration which could be the saviour of the company...

Just food for thought.

A UK Z10 Owner

hl

+1,000,000

Posted via CB10

Skeevecr

BB10 lacked and still lacks a number of apps that are considered to be crucial for a smartphone to be accepted in the mainstream and it is practically a crime that BB did not bribe the likes of Spotify, Netflix, Instagram etc. to release apps for the new devices since it would be a far superior use of marketing budget than what they have done so far.

However, if you exclude 3rd party apps then the actual OS was easily the match of (or even better than) Android or ios.

timhorton

Chris....does the fact that BlackBerry shares the old Nortel patent portfolio with Apple etc devalue their entire portfolio? Is that partnership transferrable to say Google if they were to snatch up BB? If BlackBerry holds 5000 patents does that number of patents include the old Nortel portfolio too?

pacman84

Chris: thank you for writing up a very good article, once again!
For a follow-up: maybe you could recommend actions for us shareholders... should we wait this out, sell now, is there any chance we might be able to sell for more than $9USD? Stuff like that would interest me and surely many others here on crackberry.

k8bushlover

+1 -- analysts continue to set target prices higher than $9 -- why?

onvisa

You guys who say "first", really should get a life and write something about the article.

Anonymous2039

Yeah, like "Nice" or "Too bad". /s

--Q10 and Canadian all the way! Posted via CB10 on 10.2.0.1443. #IChooseBlackBerry10

ziadk8

As a loyal blackberry user and fan, I feel let down by the company, what a waste, such a good os with such bad running of the company, now selling it to make it private, like that's going to solve the problem, no point getting anymore blackberries after my z10 and I'm going els were, you can't trust this company, its run by people who are amazing at making the worst decisions.

Posted via CB10

yorkshireman2

I agree with all the others who have lost faith.

I've been a loyal BB and Playbook user for many years, and all my staff had BBs, but I think I'm done with BB.

As much as enjoy my Z10 I feel the company behind it is dishonest and incompetent. To mess up on marketing in such a spectacular way, and then hit the market with a run of bad news and mess-ups just prior to selling out for peanuts just stinks.

I so wanted Blackberry to do well and now feel stupid to have banged the drum for them so much amongst my social circle.

tsquare

Fairfax will 'sell' or spin off the patents, to a holding company they own to license them out... like forever.

They will do the same with the service business, or sell it off, if someone will buy them.

They might well do the same with BBM... if they can get it to generate cash... other than that... it's gone.

They will have a fire sale on all the handsets... I may well have been wrong about this earlier... this might well be a great Christmas to give everyone on your list a new Blackberry! The public company has taken the loss, Fairfax will want the cash, and man those phones could be selling at sub $ 100 (US)

2-3 years from now Fairfax will have a nice little 20-40 million a year patent firm, and the rest of Blackberry will be gone.

last_attempt

BB Management fumbled badly right out the gate with BB 10. The Hardware is good the OS is shaping up they just really blew it with not getting maybe a dozen key apps at launch, and having long waits for launches to key markets. If Fairfax can pay to get the missing apps and then re launch with effective marketing you never know they could squeak out a victory and stop some of the current blood loss.

Nate650

It's not in their control to have every single app.

Posted via CB10

Grizzli

This Enterprise push is looking more like a distant dream... Samsung is pushing further into the Enterprise space now trying to get Enterprise software (Citrix, SAP, Saleforce.com, etc) developed especially for their devices and unique form factors and features, like a stylus. Sure they'll throw a ton of money at it... money BBRY can not afford to match.

Playbook007

Android devices are to fragmented from one device to the next. BlackBerry already has 25000 installations of the new BES10. They will push further.

BlackBerry will survive in the Corporate and Government Sectors! My Z10 is so much better than an iphone!

Bold_until_Hybrid_Comes

If the price per share offer is lowered the media is going to have another field day

mcstravi

Chris..first of all congratulations on the Army Run...you're faster than me, but I ran the 1/2 Marathon so apples and oranges!!
I saw the CNBC video that said this low ball offer is simple a Stalking Horse bid, done to set the floor and to spur more offers to the table. From your article you don't believe there will be any more suitors is that right?
I think the 2+ Billion in cash, the Patent portfolio (specifically with security) and BBM would draw more interest (even from big players like Google, Apple, etc. who could careless about BB10 and the hardware), even if it was just to break the company apart.

Chris Umiastowski

It isn't a stalking horse bid. See McQueen 's post the I referenced.

Army Run - yeah good race. I would never finish a 1/2 marathon. I respect the hell out of people who can.

Posted via CB10

Ibann

Reality is never kind, and it can be very painful. If BlackBerry want to survive then everyone needs a massive dose of reality. Even after all this, BlackBerry may not even survive.

Posted via CB10

sjmartin007

Since this news broke what is happening to software development, did they stop or we will see more OS leaks like those in the past three weeks?

Posted from the most powerful smartphone,z10

mcstravi

People are still working for BlackBerry..so until they don't have a job, they will continue to develop.

kyleheney

Question: Since the stock is still trading, what happens if the stock price goes above $9/share to say, $12/share? Wouldn't shareholders obviously reject the $9 offer because they could benefit more from just selling their shares "now" at the $12/share price? I don't quite understand how it all works and why the stock is still trading when there is an offer on the table that can be "beat" by the stock itself, should it rise. Thanks in advance!

Killington

The only way the share price goes past $9 is if investors speculate (through rumours/leaks) or know of another buyer willing to pay more than what Fairfax is offering. If investors feel that $9 is the best the will get, the price won't stray too far. No sense in paying more than $9 if you can't make any gains on your initial investment.

erott

Chris, I've read that perception is 9/10ths of reality. I, for one, feel the the marketing department failed. However, aside from that, I feel the constant negative press from both US and Canadian news outlets contributed to chopping the legs from under BlackBerry's attempt to solidify a comeback. I also hate to fall back on or claim conspiracy, but after watching this story for months, knowing the massive short position, reading negative news items released immediately after a positive news item, makes me genuinely think some invisible hand was at work trying to deliberately collapse BlackBerry's efforts. I feel the media is what created 9/10th of the negative perception and this is what broke down blackberry. They were truly a David character playing in an arena of Goliaths. I don't feel they were given an honest and truly fair shake at this comeback, and for the time in my investment career, feel I have witnessed a company brought to its knees by constant negative media. To think that media and press could have the power to disrupt a company's efforts scares me and makes me want to have nothing to do with the modern day markets as we now know it to be. I genuinely feel that people were reluctant to give BB10 a fair shake because of what they were hearing and or reading in the press - NOT because of fundamentals, but because of rumor, attacks and heresay. Shame on the press and all those who had any alterior motives in this collapse.

Posted via CB10

Gnomesane

I don't think the media created it, but they happily reported it, that's the nature of media: sell disasters for eyeballs and clicks. I can totally buy into Shorts (with media contacts) deliberately feeding bad news and rumours. Easily. I don't think BlackBerry has been the only company to suffer this fate either.

Posted via CB10

dejanh

This is bull$hit. Their demise is their own doing. Back in January they sat on over $4 billion it cash. If they genuinely had an interest in making the platform a success they would have paid the top 100 app providers from competing platforms to bring all of their apps to BlackBerry 10. That would.have likely cost them way less than wiping out $1 billion of cash reserves on an inventory write down that would have sold otherwise.

Thus was a setup from the get-go. BlackBerry did not want to allow BlackBerry 10 to succeed. That's really all there is to it. There is no mass collusion against BlackBerry.

Posted via CB10

bvinceb

How does not letting BB 10 succeed help them in anyway?

Posted via CB10

sandman61377

You are delusional. If the whole "plan" was to sink the company and sell it off, why wouldn't they have done so last year when the stock was below $7 and many "experts" were claiming that BB10 was vaporware? Why even bother wasting time, money, and effort bringing BB10 to market?

Posted via CB10

yorkshireman2

Probably on the off chance that BB10 was a massive hit, whilst at the same time hoarding the cash just in case it wasn't.

Surely when you are playing catchup you launch your new OS with a MASSIVE marketing campaign, not the half baked excuse that Blackberry came up with.

If anyone truly knows why the marketing was so non-existent then I (and lots of other people) would love to know.

Chris Umiastowski

Agree on this. They should have spent way more cash on getting the right apps.

Posted via CB10

sandman61377

I'm not so sure it's that simple. The attitudes toward BlackBerry that have been displayed by certain companies (Netflix, Hulu, Instagram) makes it seem like even offering them cash wouldn't convince them to make an app for BB10.

KPMcClave

While there may be some truth to what you suggest, errot, there is plenty of blame that has to fall at BBRY's own feet.

From the Super Bowl commercial that was neither memorable in the usual SB commercial way nor enlightening about how the new BB10 was actually different, all the way through the botched rollout and delays, BBRY couldn't get out of it's own way.

I didn't leave Team Blackberry after 7 years because of media. Screw the media. I left because I genuinally felt as if my loyalty and enthusiastic support (as in convincing others to get BBs) of BBRY was not appreciated. They treated us (in the US especially) like second class citizens.

Since then, nothing that has happened has made me regret my decision or think I had it wrong. Just more of the same.

Adventuro

You can also blame your carriers who clearly could not approve it anywhere near as fast as the Canadian carriers did.

Posted via CB10

Gnomesane

That's a good point. It's abysmal how long the carriers take in the U.S. to approve and rollout the updates. Still haven't read a satisfactory explanation for that. Was it the same for BBOS?

Posted via CB10

KPMcClave

I'm not comparing the availability of the BB10 devices to their availability in Canada or the UK, though. I'm looking at how other phone makers announce and then have available shortly thereafter their newest Latest & Greatest. Contrast the BB10 rollout with the new iPhones and the timing and availability of the announcement and the 9 million supposedly sold.

tsquare

On the subject of carriers... walk in to most any carrier store and you have to work HARD to find a BB. Apple will have a whole wall of the sales floor... it's in their contract. Android will have a large section as they are the most popular and have a great many handsets. Windows phone and BB set, somewhere in the back... next to the exit, where nobody can/will see them. You have to ask to be directed to them. You must walk into a carrier store looking to buy a BB to be able to buy one. Otherwise, if you walk in 'fresh' you'll never even know about them.

Lots of blame to go around to be sure... but Apple's contract demands has to be on the list.

Adventuro

I agree completely. No company I know of got this much bad press consistantly. Always negative stories to rival any shred of positive news.

Posted via CB10

scottieblues

Please drop the excuses that the media caused BlackBerry's problems. That's just a total cop out. Try being realistic for a few minutes. BB fell behind in so many ways. When you don't deliver what consumers want to buy, you suffer for it. When you continually make promises you don't keep, you lose interest and support.

The new BlackBerry 10 devices aren't bad. The BB10 OS isn't bad either. But, there is absolutely nothing special about them either. You can say there is all you want, but that doesn't make it true. Add to that the pathetic apps that BB World is housing, and you can see clearly why no one is buying a new BlackBerry. There's not one single logical reason to do so.

BlackBerry killed itself. The media reported their repeated failures. It's really as simple as that.

Adventuro

If you read a sample of any mainstream or tech related news article on Blackberry, you can not finish an article without hearing 'struggling', ' once great', 'rapidly losing market share'. I have looked into articles from bloomberg, fox news, cbc, they all have a negative aftertaste even if there is good news.

CB10 - Z10

scottieblues

What good news? That's exactly my point. All of those comments you just repeated are merely fact. Apple gets negative press all of the time too. Remarks like "nothing new", "Apple has stopped innovating", "incremental update", "not worth upgrading". And financial analysts constantly rake Apple over the coals. But, even with all of that negativity, Apple still sold 9 million new iPhones in the first three days.

So, I'm really sorry. But, like I said, the media didn't kill BlackBerry. They killed themselves.

Adventuro

PS - they aint dead yet!

CB10 - Z10

scottieblues

Ok. Not dead yet. But, certainly taking their last few breaths. If you think anything other than a breakup and sell off is coming, you're only fooling yourself.

KPMcClave

BB10 was "launched" at the end of January. How long would I have had to wait until I could get it? If I wanted a Z10 and had the freedom to switch carriers, or was lucky enough that it hit my carrier first, a couple of months. If I wanted a Q10 (I absolutely did), which was also "launched" in January with the Z10, four months? Even a bit longer?

Yes, carriers here in the States take longer to approve a phone...but Apple released those 9 million iPhones, what, 2 weeks after they were officially launched? And also had enough made to actually sell them.

Now, I've never had an iPhone and don't intend to get one, but the difference in the two situations in the windows of time, availability, marketing and many other things is simply staggering.

I'm not one of those folks who thinks the world revolves around us in the US, but nobody can deny it is an important market. That the phones "launched" but were not available for months then failed shouldn't be a big shock. The faithful, like I used to be, got disillusioned to some degree. Everyone else just forgot about them.

I don't think anyone reasonable is suggesting that there is only one factor at play here, but it certainly seems that the bulk of them are BBRY's own doing.

brunolovesbrit

All I hope is things will turn out good for BlackBerry if they go in the hands of people with money.

Clearly, they need more money for better marketing and delivering s**t faster!

Posted via CB10

40blind40

Chris, The numbers BlackBerry reported for sell through Q2 was 5.9 million units, actual sales for Q2 3.7
million units with most of those being BBOS handsets. My question is they also stated that total shipments would not be reported until actual sell through, does this mean that carriers and distributers are not paying for these handsets until they themselves sell them? It seems to me from the numbers they have accounted for every BB10 handset they reported shipping in previous quarters, so what are the shipments for Q2 because carriers seem to have a lot of them in stock, and why would Blackberry not report that info?

Gnomesane

Nice analysis. Keep it coming, thanks.

Posted via CB10

LP_Rigg

"I’d like to see them take the written-off Z10 inventory and seed those devices into the enterprise to grow the BlackBerry 10 and BES 10 base."

This is exactly what they should do.

SamirSaxena

Just want BlackBerry to survive and be there with as exciting devices (if not more!) as my Z10 when I am bored of it and look to replace it with a new phone..

Posted via CB10

waazzupppp

I have a different take on the potential collapse of the BB market... I think they should take all the written of devices and carve a new niche with the MVNO carriers for the majors that didn't sell a dang thing. If they were able to offer the Z10 at $199.99-249.99 off contract through a carrier like Red Pocket Mobile, Spot Mobile or Simple Mobile they would sell quite a few of them. If they could do the Q5 at $99.99 with no contract, it would increase the user base quickly. If the Q10 could be had on Boost Mobile for $199.99, it might have a chance against the $400 higher end Android phones.

The problem with BlackBerry devices isn't that they missed the mark with BB10, it's that people have already invested in an ecosystem (Android/iOS) and don't want to have to spend money to change it. The average iOS user has $25-30 in paid Apps... Android is about the same... So if BB could drop the price of the devices to the off-contract crowd, give some sort of AppWorld (oh, did I just say that) credit for new users and push the connectivity aspect of the best communications devices in the world again, there wouldn't be a need for any of this talk.

That said, Fairfax may try a move like this, but probably not. I have a feeling they will liquidate the hardware division like Nokia did, cash in on licensing the patents that have been acquired and then complete the breakup of the company and sell off the remnants for whatever they can get.

I know the world keeps saying that there is room for 3 major players in the Smartphone world, but honestly, there will be only two when the dust settles. Sure, there will always be startups like Mozilla, but honestly, anyone starting a new device stream that doesn't use a version of Android is just plain silly. There is already too much going for it and too many people invested in it to consider anything else.

That's just my 2 cents on this, but I would still love to see super low sticker price BB's come to the non-contract markets, just like Nokia did with the Lumia 520/521.

Gnomesane

Nice take, some good ideas. Thanks.

Posted via CB10

bvinceb

I like Wazzup's (sp wrong) idea for the phones.

Still I think they should NOT have said they were getting out if the consumer market at this point.

Posted via CB10

Geeoff

I strongly agree with targeting lower priced markets. There needs to me a big price difference between their high and low end phones. The success of Android is primarily attributable to low-cost devices using an open and stable OS.

Basically they need to focus on value for consumers, rather than value for shareholders. Value for consumers means good devices at a low price.

bvinceb

Hey Chris Do you think the way this us being handled and with the share price continuing to drop reduces the value that can be gotten when/if they try to sell off company in parts. Whether by misstep or on purpose they seem to be driving the perceived value of the company into the ground. This makes it harder to recoup their investment.

Posted via CB10

Superfly_FR

Thanks Chris. I suppose Friday will enlighten the situation a bit.
My very personal and speculative take is that Prem and Mike (1st speculation) have an equity partner (2nd speculation) - mandatory IMHO - in the hoods and don't want to disclose the deal to keep the SP low. Also I don't believe this E.P will bring (much) cash in the LBO at this state.
Well ... we'll see. Should be avg USD 10.35 soon ... rising hope and crossing fingers. That's a tough jungle.

menaknow

In the situation of that Fairfax purchase goes through, what happens to Board?

Is Fairfax now the "Board" as they have assumed ownership?

menaknow

Wow, good article recommendation.

Didn't think of it, but this point was so true:
" But an unfinanced LOI isn’t going to fool any serious buyer. I don’t think Microsoft will suddenly try to top him at $11/share. If they want the company, they now know they can buy it for in and around US$9.00 a share. The BlackBerry Board has telegraphed that figure. "

Kingdmen

To sell my shares or not to sell..

Posted via CB10

assk

I'm really feeling sad. I just don't want to go back to android or ios. 30 okt is the day that I can chose a new phone for my contract. I just want a clear answer from BB, are they going to push harder for us or are they slowly leaving us.

Just come with a freaking clear goal blackberry! And if BB is done fighting... please just be honest about it and we can move on (after a cry for 5 days)

Parthiv Shah

Chris: Can I keep my shares in private form? Do I compulsorily need to give or sell my shares? Can't I not have them in private and take advantage of a future exit by Watsa and PE's? Appreciate your response!

michaelyoder

Hey, do you think there's even a remote chance of a strategic partnership with someone else in the future after the dust settles from going private, assuming that all goes as planned?

Asuhmiaseh

Not sure if anyone has mentioned this but Deninger has a very good take on things . Definately worth the read. ( http://market-ticker.org/akcs-www?post=224601 ). IMHO the board and management have totally bungled this and very suspiciously so. They all need to be fired and fresh shark like take no prisoners people brought in.

Posted via CB10

Pete The Penguin

Thought provoking article there.

yorkshireman2

Give the guy who wrote that article the job.

THAT is exactly what Blackberry should be doing!!!!!!!

trbowser05

Does it bother anyone else that just about every news story about this privatization deal features a picture of the oldest, crappiest looking BlackBerry with a cracked screen? And then they talk about how BlackBerry is done because they don't know how to innovate, and nothing will ever out innovate the iPhone. They barely mention that the company is going private and will probably still be around for awhile. They don't even mention BlackBerry 10 and then talk about how ease of use on BBs is terrible and this is why nobody will buy them (this is just a generalization based on about four news articles I just read).

Its true that BB was slow to innovate, but BB10 looks to me like the most innovative, and easy to use new OS out there, people just haven't tried it so they assume it sucks. This media bias is what is stopping people from even considering a BlackBerry! Terrible reporting.

Nate650

Yea the media does not treat BlackBerry well. :(

Posted via CB10

globalhc

Stinkier Than the Stinkiest!!!!!!!
Fairfax is spending 4.7 billion to get 3 billion in cash plus BB7, BB10, BBM, BES10, QNX, Patents, Real State "I think around 2 Billion". What a F.......G SCAM!!!!!!!!!!!!!!

david_nbyla

The way I look at some of that 3 billion in cash is likely allocated to pay for the buy out packages of 4,500 employees... that's gotta be pricey... so lets 1.5 billion in cash on hand is 3 bucks a share they are paying 6 bucks for all the other stuff... it is a fire sale but it looks like no one else wants it even at that cheap price... mind blowing...

nick canada

Chris seeding the written off z10's is a great idea, (I posted something similar yesterday) this phone is great people just need to see it

Thanks for the article

Posted via CB10

Nate650

Stock is down another 4% today. Very bizarre trading action. People say 9 per share is pathetic but who knows, maybe in a few weeks people will be wishing to get that.

Posted via CB10

Applevine

Hi Chris,
In hindsight, as one of the big problems with BB in the consemer space is the app gap and the lack of big name developer interest, couldn't they have priced the Z10 better? My view is that they should have not tried to pitch the Z10 as high end and competitive with the Galaxy S-4 etc. Price it low, Even if that meant subsidising it themselves ( which they are in fact doing now with the write off of the stock). pitch it and the Q10 (only needed slight price reduction as it would still be profitable) to existing BBOS customers. You get us to trade in and upgrade to the new platform. If 1/4 of us upgraded in the first quarter, that would be between 15-20 million adopters of the new platform. Not as much money but the perception is now one of a rapid adoption of the OS. Cue more positive than negative press, followed by developers. Carriers are able to upsell smartphone data plans instead of low cost BIS subscriptions so they are happy. By starting with the Z10 as mid level, you give the expectation that you are going to be doing a high end competitive phone later ( the eventual Z10). So although the financial situation may have been similar, the perception and therefore the narrative is highly different. What do you think?

dehdude

In hindsight it's easy to say.. truth is the board must of really thought the phones would fly off the sleeves.. cuz nobody wants apps right?

You can't sell for the same price as the galaxy with half the functionality (lack of almost every popular app) and expect people to buy.

Reason Microsoft is even still in the game 2 years later is they focused on all price points (especially low end) to get subscriber numbers up, then you can bring something new (innovative) and go head on with the giants.

Posted via CB10

PhilipDZ

Chris, I would like to ask this question. Why did BlackBerry aggressively search for another handset maker to license the BB10 Os Like HTC or Sony? furthering maker penetration via a more desirable device

Sorry but Z10 and Z30 are not going to be secuessful with outdated hardware, and no real obvious innovation.

Posted via CB10

Geeoff

I think you meant, "Why didn't Blackberry......" and then I agree with your question.

The arrogance to think that they could do everything and earn huge profits at the same time, is what led to their downfall. Apple has managed to do this, but even their market share is much smaller compared to Android.

ADGrant

They did try to license the OS. No one was interested.

physbb

Although I'm somewhat bothered by the inopportune timing of the Friday press release, and the subsequent share price hit, I'm more concerned by the overall behavior of the company over the past few months.

* How did they mess up the inventory so badly? Inventory was only listed at $900M in Q1. And now they're writing off $950M, and that's all attributed to Z10's? Just as a back-of-the-envelope calculation here, if they're writing $100 off of each Z10, then that means they have ~10M Z10's in inventory; far more than they've sold! How can they be so clueless about sales?

* How was the BBM for Android and iOS launch bungled so badly? Up until 7 am on Saturday, the pretense was maintained that the launch would go fine. And now we're looking at *at least* a week-long delay?

* Last quarter, didn't BlackBerry announce they would increase marketing efforts? Where were those efforts? There was ample public criticism about their marketing, which was apparently ignored.

* Product sales were hurt by BlackBerry creating uncertainty by repeatedly announcing / leaking information about a potential sale of the company. If a sale of the company is desired, it does not make sense to hurt your business in the process, as this lowers the final sale price.

* Watsa only left the board a few weeks ago due to conflict of interest. I find it hard to believe that there was no period prior to this, during which he was on the board, and was also interested in purchasing the company. If that's the case, then there was a board member with an interest in lowering the share price.

* The BOD created an incentive for Heins to perform poorly, with the ~ $50M package if the company is sold.

* Private jet purchased just a couple months ago shows poor grasp or a lack of concern for the company's finances.

All of this, together with the timing of the release, suggests to me that either the BOD was either incompetent, or else they were not particularly concerned with shareholder value. I'm not sure which it is.

playpen007

I don't really understand they have the best BB10 software with features like HUB, FLOW, PEEK, Video Screen Sharing and the best Typing Virtual keyboard and it fail to sale the products. If I have to point finger, I will definitely point at management and marketing. They could spend some money they have to get some apps that the most consumer needed and then releases their devices. But it doesn't seem like management willing to go that route. In conclusion, I strongly believe they miss manage this company very badly. If I have the money, I will out bid Fairfax 4.7 billions and replace the whole management and marketing team with the people who capable of. Taking private doesn't solve any problems just to hide away from the public. I believe there are a lot of people that can run BlackBerry better than the management right now.

freddysrevng3

@ play - "True Story".... I walked into an ATT store in northern burb of Chicago, last Saturday, to see the iToy 5S that the iHoles stood in line for last week because they don't understand how to purchase things on line... In any event, I saw a Z10 being purchased. I asked him, why are you buying a Z10? He showed me his slider Bold 9801 with a cracked screen and he said - I like BlackBerry....

Here is the BITCH of it all... I looked on the display wall and they had a Q10 in the corner of this ATT store - THEY DID NOT HAVE A F^CKING Z10 ON DISPLAY!!!!!!!!!!!!!

Frank Boulben - the guy never ceases to amaze me.... No signs - no phone on display.....

BlackBerry....

br14

Don't blame Boulben for AT&T store layout. He has absolutely no control.

The reason AT&T and Verizon haven't been selling the Z10 (or the Q10 for that matter) is that they were sitting on enormous iPhone 5 inventory they couldn't clear. Those problems should be clearing now.

Just in time for BlackBerry to have 2 million phones they can give away more or less for free.

Should be an interesting few months.

craigdh1

If we had a REAL government in Canada... They would step up and help BB out! Instead Harper is busy making deals behind our backs!!!

cellphonejunkey

The Z10 by no means just a "basic" phone? It does have its merits running os10 BUT I think the poor marketing of the Z10 I think led to its unpopularity! BUT I still think there is a place in the BlackBerry market for the Z10 and Z30 for that matter. How come nobody talks about the higher precision in touch typing on our keyboards compared to ios or android? The quality of touch typing on the Z10speaks volumes compared to any other device out there.

I really hope BlackBerry can get their heads in gear to push the company farther upward and forward!

Posted in CB forums and on Bbos leak 10.2.1047

freddysrevng3

@ cell - because none of those "Superior Features" of Z10 matter when you have a loser of a Chief Marketing Officer, Frank Boulben, losing that message to "If you don't have Instagram and a few other Metrosexual Must Have Apps" you are a complete loser and your phone is a loser...

Next question...

br14

BlackBerrys marketing "fail" has more to do with the carriers Apple deals than with anything BlackBerry can control.

Verizon etc couldn't sell BlackBerrys because they had too many iPhones sitting in the warehouse and were on the hook to pay for them.

In Verizons case they had $14 billion dollars in inventory to clear.

If you went into their store and asked for a Z10 they'd try and sell you an iPhone.

bbq10l

Not true. I asked for the q10 at Verizon and they gave it to me without discussion. It was also on display up front with all the other phones.

Posted via CB10

br14

Yes but when was that?

My friend went into a store in Houston when the Z10 was released and they tried to sell him an iPhone. It's likely that by the time the Q10 was released the inventory/contract details were cleared.

WiseCracker

At this point, wouldn't Watsa be buying all the shares he can at $8.20? Why pay $9.00 in a couple of months when he can buy today at an $0.80 discount?

k8bushlover

He doesn't have the money yet. And all other stockholders would have to be willing to sell at that price, in the market.

WiseCracker

I understand that he needs SH approval to buy the whole company. But he could be buying on the open market, now at $8.11, as share become available. He may not have enough money for the whole purchase, but I suspect he has enough to add 5 or 10% to his ownership. Of course, it looks like BBRY is getting cheaper by the hour. Now at $8.06.

freddysrevng3

@ Wise - "great question".... might, actually, give more "street cred" to the fact that he is, actually, serious about buying the company so that Faber and the rest of the "CNBC/Cramerica/TheStreet/Yahoo BlackBerry Bash Consortium" might take pause from calling his offer a "fake".

KenFletch

That would be risky. Due diligence is underway and the $9 offer can go down. If he buys at $8.20 and later decides the offer should have been $8 then he has another problem.

The is just a proposal with a lot of get out clauses even Blackberry can say no thanks to the $9 in November. Suppose a turn around has formed up in the next 5 weeks, BBRY could say thanks but no thanks.

Watsa is no longer an insider and things could change for the better.

BBRY only agreed to consider a sale at that price , not to accept it.

david_nbyla

Hey Chris,

The average price Prem paid was 14 dollars a share, so if someone like Samsung was asking $4 a share they'd really lose out. Wouldn't Fairfax be forced to make a bid if other players went in with low ball offers?

br14

Agreed. But if you add his payment for the deal break, and assume an extra buck a share for a counter offer - he gets out more or less even.

k8bushlover

"If shareholders think it’s a low bid, they should ask themselves why nobody else is willing to pay more."

Because the recent very bad news and complete bungling has dropped the stock to its present level, the lowest in a year. Did Fairfax/Watsa have inside information (beyond what he already knew when he stepped down?) Was the deal made immediately after the announcement Friday? How did $9 become the fair price? Pretty quick reading of books and documents, the sudden (unexpected except by Blackberry and Watsa) decline in price, lo and behold, there's a deal at just barely above the lows the stock reached Monday. Not the lows it had reached just a week earlier (which today, would seem eminently "generous" if offered.)

Of course, he wants it for a discount, not a premium. But why not $8? Or $7? How was the valuation arrived at, and so quickly? It's still pretty hard to believe there was no collusion, but I know it will be even harder to prove it.

freddysrevng3

I say Prem should bid $8.... since that is, apparently, what he came to this country with...

br14

"How did $9 become the fair price?"

If Watsa hadn't made the bid you'd be looking at a $6 price.

In fact had he only wanted the company to asset strip, he could have waited a little longer and paid less than $9.

quizm

It's a bit amazing that a non tech company knows what to do with BlackBerry. They could also lose their shirts.

Posted via CB10

mikesz10

Ummm bbm cross platform????

Posted via CB10

alternator77

A few thoughts...
First tech is a cyclical thing. Having said that the average consumer tends to want what they feel is off limits and if BlackBerry goes private catering to business only it will put them in a position they were in ten years ago. A niche player with a product people are curious about.
That is a good thing imo.

Secondly taking time away from the consumer market cam have the effect of wiping the slate clean over time. Allowing them to rebuild the brand in a more focused way.

Posted via CB10

Knightcrawler

Chris, what are the odds of this $9 price dropping lower before the deal gets finalized? And how low could it go? Do you think we'll see the share price hit $6 again and end up with a $7-$8 offer from fairfax?

br14

If the offer goes through you get $9.

Just a guess, but I think you'll be getting $9. As will I. I can't see anyone else coming in, and I don't think Watsa will have much difficulty raising the couple of billion he actually needs to buy the corporation.

Poirots Progeny

Thanks for a great (mostly) objective appraisal of the situation. For those that follow BlackBerry this kind of rational - if admittedly superficial, though that is why you link out to another article - assessment is ideal.

Thanks!

I do enjoy reading your appraisals!

Posted via CB10 on my BlackBerry Q10

Kevmobile

Full hour of CBC Radio Ontario Noon phone in was about BlackBerry. Sure would have liked Chris as a features guest or to have called in. http://www.cbc.ca/ontariotoday/

Posted via CB10

michaelshanoss

They didn't even finish their transition plan, and bb10 hasn't even been out for a year and their waving the white flag? C'mon blackberry Wtf. I sure would've liked to see 10.3 starting development,and hienz said they were interested in yearly updates like apple and Samsung. Guess we won't be seeing that anytime soon.

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br14

They're not waving the white flag. They're retreating back to the trenches to prepare for another attack.

AL8x B

A lot of tweets to speak of nothing and no news for the reals issues... they sold, are they still working ?

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Kevmobile

And CBC The National had a panel discussion on BlackBerry last night. http://www.cbc.ca/thenational/watch/mobile.html

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bbry4life

It's too early to tell. BlackBerry could try to take themselves private. With $2.5B left in the bank, at today's valuation, they could buy up every outstanding share out there and still have money left over. Anything is still possible at this point.

What Prem Watsa came up with is NOT AN OFFER. What he's saying is this: I might buy for $9, I might walk away, I might lower the price, I'm still going to shop around, I might match other offers. But regardless, I get $150 Million from issuing a letter of intent that says NOTHING. Prem Watsa is a smart man. He knows when he as the upper hand. This is a win-win situation for him and only him. And BlackBerry and its shareholders end up paying. Paying him $150 Million for NOTHING. The board of directors is stupid if they don't see this.

BlackBerry's management really screwed up.

Pathetic attempt at what they consider marketing = fail
Promising BBM before it's ready = fail
No word from the CEO = fail

They've given up before it's even over.

KenFletch

the only penalty for a no thanks as long as all negotiations are in good faith is legal and other expenses up to $5M max. The other penalties are for bad faith, taking another offer.

elicash

What about Thorstein Heins dumping shares at $10.54 on friday before the announcement? How is that not criminal? I don't care if they are scheduled sales or not, its horrible. He's now played a key role in destroying two mobile companies. Siemens mobile and now blackerry. And we are going to send him and his oversized grey suits back to Bavaria with a $50 million parachute. Shameful. What a hack. There is no question there was a major board rift between Prem and Mike L. No question whatsoever.

br14

His shares are handled by a trustee to avoid conflicts of interest.

Heins shares were sold by the trustee to pay off taxes due on the shares. Thorsten Heins had nothing to do with the sale.

latng

What about 10.2 update. Are we still going to witness this update some time mid October?

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bigbunny78

I have been a loyal BB user and promoter since 2000. I also work closely w/ BB as a vendor of R&D equipment and have been adversely affected by their mismanagement. I remained a shareholder, and a loyal and vocal proponent of their products.
After last week's circus they have lost my support and respect. What a cluster****. From releasing the Z30 on the same date as iOS7 Release, to the earnings warning, to the failure to launch BBM, and all this followed by the white knight offer from Prem Watsa and Fairfax makes me sick to my stomach.

Considering the importance of the BB10 launch in the USA they completely pooched it. Who was responsible for this? His head should roll. BB is very familiar with the Carrier Acceptance Test processes that apply with VZW, AT&T, TMO etc... They have been releasing into these operators for years. They had the first GPRS service on ATT way back in 2000/01 and worked closely with AT&T on optimizing data transmissions etc. They knew how to do this business, but they forgot or were completely mismanaged.
I feel for the people losing their jobs, but when your shipping volumes are 25% of what they were at their peak then it only makes logical sense that restructuring will take place. 7K employees are back to 2006/2007 staffing levels.
I love the crackberry community, but i'd be interested in hearing from the admins on how site visits have fared these last 12 months..
Regardless, after a certain point being a fanboy in the face of gross mismanagement, possible manipulation, terrible execution etc; begins to take its tolll and one begins to question one's own intelligence.
I love my Z10, but wish there were better apps, if only as timewasters while waiting at airports etc..
I'm out as a fanboy... this management team just doesn't warrant it.

br14

"but wish there were better apps"

10.2 should be out in October and will run most Android apps. I'd guess you'll get what you need soon enough.

Erik Lehman

I just want bbm and then the company can go do whatever it wants

Posted via SEGA master system

thecsman

I saw on The National how much TH is going to get in case he is to be let go from CEO. The amount is money he is going to get is grotesque to say the least.

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br14

Mr Heins will get nothing. Should the Watsa deal go through he will stay in place and continue the transformation started while Mr Watsa was on the board. As suggested by the President of Fairfax a day or so ago.

bbry4life

I spoke to a friend of a friend who works at BlackBerry BBM. When Thorsten Heins announced BBM would go cross-platform by end of summer, it was a management decision. The people doing the work didn't feel it could be done. But management went ahead and made the announcement anyway.

It's like the PlayBook all over again. This made me lost faith in all levels of management in the company. The people doing the work need have input. They are not code-writing monkeys.

StoicEngineer

Chris, thanks for a great article. Especially, thank-you for splashing some cold water on the conspiracy theorists.

I think that you nailed it; the reality at the board level is much more dire than we realise. What exactly do they know that we don't?

Although I accept that the people in senior management are intelligent reasoning people, there seems a sense of desperation in a realization that the plan is not working. The population is simply not into BlackBerry products and no one at BlackBerry can understand why. (Yes, marketing is part of it - maybe the largest part of it. But something else is out there too.)

It is hard for me to believe that the superior BlackBerry phones are the reason. OTOH, globally everything has changed in the continuing financial "re-set". Perhaps, the sales "rules" have changed too.

The cure maybe time. The hope is that the privatization can provide the time.

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br14

The truth is the board is doing the hard stuff that was ignored for several years during the previous regime. They've cut costs enormously, and delivered on the new platform.

They're actually doing a reasonable job in the circumstances.

But the delay in getting out BB10 created a vacuum that has been filled with negativity and so the "seeds" of rebirth have not been given the room to grow.

As you say, going private should give them the time to recover (as Prem Watsa knows from experience). I'd say his experience with hedge funds is precisely what is needed.

MPF94025

@BR14

"The truth is the board is doing the hard stuff that was ignored for several years during the previous regime. They've cut costs enormously, and delivered on the new platform."

You're awfully forgiving about the board's performance. Starting with the Super Bowl with someone on fire (great if you are selling flame retardant clothing...), it has been one bungled step after another.

Many want to see the board members criminally prosecuted. They have deceived fans, users, and investors multiple times over. Unfortunately, they won't get a second look from securities regulators since no lawyer will build a career by making an example of stupidity. As things stand now, however, I for one feel they deserve any bad mojo headed their way.

br14

"I’m not claiming I can read Prem Watsa’s mind"

You don't have to. He's already said he's going to run the company as a going concern.

For some reason, bloggers and commentators on BlackBerry always assume they have no impact on the company. Nothing could be further from the truth.

I work with clients who don't believe BlackBerry has a future, because they're consistently told in the press BlackBerry has no future. "Give a dog a bad name" etc.

BlackBerry needs to be taken out of the public gaze for a short period in order to regroup and to deliver it's new OS without the pressure of quarterly earnings reports and consequent stock price manipulation.

As for Mr McQueens blog, I'm afraid he adds nothing and simply continues the rhetoric that Prem Watsa has some deep mysterious motive for making a bid.

How about the motive that Prem knows exactly what happens when bad press destroys a company and also knows exactly how to fix that problem?

Prem Watsa was on the board of BlackBerry until two weeks before the end of the last quarter. He knew exactly the situation with sales. His timing is perfectly understandable and judged to create a fair price.

Had he not made the offer, the price would probably have fallen to $6 (as it did last year). He has actually done investors a favour - that he did not need to make - by bidding now. Probably to try and provide some stability and to get in to the company before someone bought it to asset strip.

I for one think Mr Watsa - a value investor - believes in the company and it's new products - and believes he can help it back to its feet. I am losing personally from the offer, but I wish him every success.

mrneo3277

Damn. What. Everybody else it. Saying and thinking, from the time the z10. Reviews and others. Brought up application and android in every review. But they never bring. Up BlackBerry when talking about io7 and the similarities, it seems that they want. BlackBerry out so they can get at the business market that BlackBerry still holds,,whenevdr they review other phones. It's a review of the phone in question, first thing out their mouth is "after. Apple stole their market share" and then compare everything of the z10 to the iPhone and Android, media. Wanted BlackBerry 10 to fail,all the greatness of the z10 was just over looked for lack of apps, they basically said nb10 is better. So don't. Talk about the phone. Abilities, play the apple game,make the argument about he apps,i have been BlackBerry since the 8330,when iPhone didn't receive or send mms..these reviewers would turn the phone on and start the review,with no time to use the phone ,just basically massacring the z10, all because hating BlackBerry is in season right now,we. Don't know of what BlackBerry is. Up to right now. Hut the last plucking thing to do is hold your damn head down and panic, appleheads showed up to get the iPhone 5s,its what they do, ,they live buying the same phone year after year,bb is different they make a terrific phone to use. For the next three years. We got sense(and I don't give a damn. What iPhone user I offend, your. Stupid, Jim Jones had the same effect on his people, ). BlackBerry IS NOT A, WE TRIED, IT DIDNT WORK,LETS GO COMPANY. BlackBerry started the email to your phone revolution, we are a CULTURE, not fanatics, we don't say we just gotta have that, we say I can't to use that, get it,
Stop. Letting these hattas distorted you love and vision of BlackBerry. Ride with em to the end. We didn't give up. 3 years ago. When they said BlackBerry. Was out of business, they feel they have to get out public eyes to fix problems, cause the media is on the shut BlackBerry down train, I. Feel they will. Focus harder on business. But still. Effectively take care of the loyal consumers. Shamn on yall for getting scared and $:+;? If the end comes. Go out like BlackBerry solders, Kevin you need to be stronger than that man,people are watching you, pay attention,things are happening the way they are for a reason,
Chess not checkers, hell. BlackBerry is playing GO(look it up, it's harder than chess and checkers)

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mrneo3277

Sometimes you have to step back to go forward,
Apple did it in 1998,so. Everybody use the hell out of your BlackBerry's , and go get the z30. If you pocket allows it

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w0lfgang

I recently came across this clip of the BlackBerry executive team at a team skill building seminar...appalling!

https://www.youtube.com/watch?v=k5ba1OKY7Xc

mnc76

Believe you me -- there will only be horrific news on Friday. In fact, I believe it will be worse than anyone can imagine.

I will be shocked if there is any positive news.

And the number of companies "testing" BES 10 is not good news until it turns into actual sales :(

How can I go back to a non-swipe / gesture-based OS :( :( :( :(

Posted via CB10 on my BlackBerry Z10

inspectrheck

Nice informative article Chris... the questions that the answers are unclear on for me, is what does being a niche player mean in the enterprise and how/what does that translate for the current consumer market? I understand the "prosumer" approach or concept but what does that mean for getting upcoming devices on their roadmap into the prosumer hands who are not in enterprises world?...

I am truly confident in their previous statements about looking for strategy to scale bb10(as their products are #1) but the new how/execution is unclear even with Wastsa's entity taking over BlackBerry...

Tons of these smartphone divisions and results in the major players weren't realized in a day, month, or a year and no way BlackBerry 10 adoption can realize success as quickly as Samsung/Google/Apple as they play in other arena's that drive brand and blind product adoption but with the latest milestone in their transition plan, further details are still unknown on activities on their critical path..example a new marketing strategy..?!?!

Posted via Z10 | BB10.2~1743

FOIA Gras

Chris, what happens to BIS (and its users) under what you consider the most likely scenario at this time?

Posted via CB10 on my Q10

hl

+1 000,000

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nabollocks

With BES 10 recently launched to the cloud, BlackBerry is in a great position to wipe the floor from small business owners right through to the largest multinational companies. ( think 5 employees through 60k employees) This is the future of secure mobile computing and is worth more than the current bid alone. BlackBerry is still the gold standard for secure communications and will be for years to come. The news of the NSA intercepting BIS comms adds pressure for slow adopters to get a move on with their transition to BES10. Unfortunately for the BlackBerry investor, none of this information is penetrating through the Apple vs. Android vs. BlackBerry haise and wall street seems determined to nail BlackBerry based on handset sales alone which form little of BlackBerry future income. The real money is in services (think IBM) and BlackBerry has that covered for the foreseeable future with both iOS and Android integration into the new BES10 servers. Once BlackBerry goes private, BB10 devices should be issued free of charge to BES10 subscribers. Get a BB10 device in the hand of every professional and make the BlackBerry slogan mean something. One more observation... BES10 includes private messaging (BBM) so business users are set. Now release Public BBM on the world, grow the user base and sell that s**t to the highest bidder. In conclusion, investors lose, Fairfax wins and BlackBerry dominates the future of secure mobile computing.

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Crackberrykills

Hey Chris, we need another article over these financing concerns for the BlackBerry going private deal. The BlackBerry stock took a 5% tumble over that.

Giro_UK

I'm sure that $9 will look good with Fridays 'more bad news'. The price of shares dropping will ensure holders agree to the sale of $9.

A UK Z10 Owner

Tony Stashuk

I am having a hard time understanding how two ceo's that are very smart, or people think they are smart, have a Very profitable business, can just let it go down the shitter and then walk away. They built this up to be the best company there is in this type. It may have been RIM it became, research siting on my ass.

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br14

It got out of control. They grew from a couple of thousand staff to 20 thousand in the space of 5 or so years.

With that kind of growth comes administrative chaos and empire building. There was an interesting story in the Economist a few years ago about Google as they grew. Apparently they had similar chaos.

Despite his Harvard training, apparently Mr Balsillie didn't realise the effect on efficiency of that kind of growth. From innovating at light speed in the early 2000's, BlackBerrys barely changed in the years prior to the iPhone. And once they realised they needed to change, they were too fat to change quickly.

MPF94025

@BR14

"The truth is the board is doing the hard stuff that was ignored for several years during the previous regime. They've cut costs enormously, and delivered on the new platform."

You're awfully forgiving about the board's performance. Starting with the Super Bowl with someone on fire (great if you are selling flame retardant clothing...), it has been one bungled step after another.

Many want to see the board members criminally prosecuted. They have deceived fans, users, and investors multiple times over. Unfortunately, they won't get a second look from securities regulators since no lawyer will build a career by making an example of stupidity. As things stand now, however, I for one feel they deserve any bad mojo headed their way.

br14

They've delivered on most of their promises, and oddly enough Thorsten Heins has been pretty well on the money guidance wise - not including the massive write down this quarter. BB10 for Playbook, and BBM for Android are two notable exceptions - and the Playbook at least was for good reasons.

Marketing wise is a mixed bag. Clearly the more European approach introduced by Boulben didn't work in the US - but then they were never going to sell phones in the US given the state of the carriers inventory.

The Super Bowl ad was a mistake. They didn't have product for sale in the US, and they should have saved their money (though the ad did score highly in getting attention - at one point being number 1).

But the Formula 1 sponsorship has generated great exposure. Alicia Keys - not so much - unless you happen to be a fan. I think that was targeted at females - who are 50% of the market after all.

Tony Stashuk

The two clowns at the top made there billions, and then sat on there asses while the company was drowning. They probably use iPhones

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koboss

First Mike And Jim and there Roadmap to leapfrog the competition, now Thorstien with will sell 10s of millions all a bunch of lies..

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robin11

The parts of BB are too valuable not to attract interest. I believe either:

1. Potential partners are waiting for Blackberry to go private before stepping forward, or

2. Blackberry and Fairfax already have a partnership deal lined up.....but after Blackberry is taken private.

In either case, shareholders will not participate in any turn around.

TemjinC

The Earning Call has been cancelled, they will still release the result but no earning call.

anon2100101

To appoint a german bookkeeper for CEO was back than an act of desperation. The ONLY (ONLY!) reasons for me to labor a while longer with BlackBerry and to be reluctant to throw my BB-device (as a symbol for an arrogant, narcissistic and antediluviant Business conduct) into the garbage can is the fact, that I HATE kraken google/android more than I can descripe and recognize iPhone as puerile and poofy.... If their would be an equal vendor on market I would be the first to give BlackBerry carthartic deathblow! I would be complete satisfied if would find the OS10/QNX/"BBM" finally on a Lenovo-device!

Deltrus

Correction: "will announce"

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kastortroy

Chris, always a very good read when you write thses posts. I have a question to ask concerning BlackBerry marketing dept. Maybe I'm not seeing it in the right context, all this time their marketing dept has been completely non existent, with the exception of superbowl ad. Im curious as to how any tech business, especially in mobile communication, can properly compete without effective ads to promote their products. BlackBerry was completely out to lunch, when compared to Apple and Samsung. I realized they didnt have the huge budget with the others, but i believe there are other effective ways to market your innovations without spending Hundreds of millions. They were able to get Alicia Keys on board, but seemed they didn't know how to utilized her. Same as the F1 sponsorship. These attempts at marketing BlackBerry was completely inefficient and waste of money. I just cannot understand their methods, and its as if cmo Boulben head was stuck in the sand. We all knew bb10 was brand new and vastly different from other oses, yet they tanked at effective marketing. How is the average consumer, from the get go, supposed to grasp the than new os concept since there was no real advertising. I realize you specialize in the market and financial aspect, maybe you can clarify this dilemma from your pov. Coming from an iconic global brand, this is baffling. Traveling to South East Asia often i see blackberry ads that are amazing and sometimes blown away by it. Here we get that bizzaro superbowl commercial. What am i missing?

Btw, as a minor sharholder I'm stinging a little but i like where bb10 is going and WILL continue to use BlackBerry. I Hope you can maybe help me understand better BlackBerry "bizarre" marketing ways.

kastortroy

Also, apologize for being off topic a little.

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