Blackberry – A Rise and Fall From Grace

Blackberry announced today that it has accepted a $4.7B tentative offer from a consortium led by Fairfax Financial Holdings Ltd.  This translates to a $9/share offer that is significantly less than Blackberry’s high-water mark of over $149/share in June of 2008.

This marks the end of a once stellar Canadian company that defined the smartphone market in the early 2000’s.  Sadly, they ignored the ‘consumerization’ of the industry that happened after Apple launched the iPhone in 2007.  As I have stated in many previous posts, their reaction was both late and lame.  It wasn’t until January 2013 when they introduced the world to the new Z10 based on the new Blackberry 10 operating system, again too little and too late to make any significant impact in terms of market share.

Last Friday was a significant death blow when their quarterly results were leaked a week ahead of schedule with the news that they lost almost $1B in the quarter and were taking a $950M write down on devices that remain in inventory and not selling.

It is quite obvious to me that the company will likely be broken apart in order to realize value from the parts that matter – the patents and potentially, the services.  The company took another major hit though this weekend when their attempt to rollout BBM for Android and iPhone was halted.  The explanation from the head of the BBM division was that due to an unauthorized Android version being distributed through various Android marketplace stores, that this version caused tremendous issues with their service infrastructure.

The offer is open for sixty days in order to give Fairfax the time to go over Blackberry’s financials.  The offer is subject to shareholder and regulatory approval.

About Grant Fengstad

I’m a technology professional in the travel and transportation sector and have been very involved with the Internet for over 20 years.