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BlackBerry Ltd. Exploring a Sale, Joint Venture or Going Private

After stories by Reuters and Bloomberg last week sent rumors swirling about the company’s future, this week BlackBerry Ltd. (formerly Research in Motion) clarified an announcement made last year that the company is considering a variety of “strategic alternatives.” Those alternatives reportedly include a potential sale of the business or its assets, the organization of an unspecified joint venture, or the possibility of repurchasing its stock in an effort to take the company private. The difference between last week’s rumor and this week’s announcement is that BlackBerry has now appointed a special committee of its board of directors to oversee the implementation of whichever alternative is chosen.

BlackBerry has been struggling with loss of market share in the global market. According to technology-sales tracker IDC, BlackBerry’s share of the global smart phone market is now at 2.9 percent. While that puts the company in fourth place, its performance has driven share prices down over 92 percent in the last five years.

At the same time, BlackBerry reportedly has some desirable qualities. According to the New York Times’ DealBook blog, the Canada-based company has almost $3 billion in cash on hand and short-term investments and no debt, which put the company’s total value at approximately $2.3 billion. It has also cut its workforce and overall costs significantly in the last few years, and it now operates leanly enough to compete with its larger and more profitable peers, including Apple and Microsoft.

Taking the company private seems tempting, as it may be that shareholder demands for quarterly financial results are actually distracting BlackBerry’s management from turning around its product offerings. As Reuters reported last week, one source of investment income the company could use to buy back its stock might be the private equity firm Silver Lake Partners -- the same firm Michael S. Dell partnered with in his attempt to take Dell Inc. private. In the past, BlackBerry has received queries from Microsoft and other large tech firms, along with companies in China, although the Canadian government has indicated Chinese takeovers might be barred by national security concerns.

In considering a potential sale of the business, Bloomberg reports that the Canada Pension Plan Investment Board has expressed interest in the possibility of purchasing BlackBerry or some of its assets. That said, the fund said in a statement that “it’s our business to look at any large asset up for sale, not that we had any idea whether this particular company would interest us.” So, cards are being held close to vests.

That said, two of BlackBerry’s board members have announced their resignations due to potential conflicts of interest during the process, which could indicate strong interest from the inside.

Source: The New York Times’ DealBook blog, “BlackBerry to Explore Its Strategic Alternatives, Including a Sale,” Michael J. De La Merced and Ian Austen, Aug. 12, 2013

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