Exclusive: BlackBerry open to going private, sources say

Fri Aug 9, 2013 12:12pm EDT

A view shows a cracked cookie with a Blackberry logo at the Blackberry Z10 launch at a Rogers store in Toronto February 5, 2013. REUTERS/Mark Blinch

A view shows a cracked cookie with a Blackberry logo at the Blackberry Z10 launch at a Rogers store in Toronto February 5, 2013.

Credit: Reuters/Mark Blinch

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(Reuters) - BlackBerry Ltd (BBRY.O) (BB.TO) is warming up to the possibility of going private, as the smartphone maker battles to revive its fortunes, several sources familiar with the situation said.

Chief Executive Thorsten Heins and the company's board is increasingly coming around to the idea that taking BlackBerry private would give them breathing room to fix its problems out of the public eye, the sources said.

"There is a change of tone on the board," one of the sources said on Thursday.

No deal is imminent, however, and BlackBerry has not launched any kind of a sale process, the sources said. Even if it tried, BlackBerry could find it hard to come up with a buyer and the funding to go private. With the company still posting losses and bleeding subscribers, private equity firms and other buyers may not want to step up.

The company's shares have fallen more than 19 percent this year. Its market value has fallen to $4.8 billion, from $84 billion at its peak in 2008.

BlackBerry, which had been pinning its hopes for a turnaround on its new line of BlackBerry 10 devices, declined to comment. The sources declined to be named because these discussions are private.

BlackBerry's openness to consider a deal marks a radical shift in thinking at the once high-flying smartphone maker. Until recently, BlackBerry, formerly known as Research in Motion and a pioneer in providing secured emails on handheld devices, had been bent on staying independent, betting its turnaround on its latest smartphones.

Last month, Heins said the company was on the right track and just needed more time to fix its problems. He said the company will unveil more devices that run on the BlackBerry 10 operating system over the next eight months.

The company has also been looking at options such as licensing its BlackBerry 10 software and other partnerships.

Waterloo, Ontario-based BlackBerry has recently had discussions with private equity firm Silver Lake Partners about potential collaboration in enterprise computing, one of the sources said.

Silver Lake is caught in a bruising $25 billion battle to take Dell Inc DELL.O private. Should it succeed in the Dell buyout, one possibility could be for it to collaborate with BlackBerry in mobile computing, where the PC maker has struggled to gain traction, the source said.

The talks with Silver Lake did not involve any buyout or other transaction-related discussions, the source said.

Silver Lake declined to comment.

Pressure is only increasing on the smartphone maker. BlackBerry 10 sales have come in well below some analysts' expectations, raising questions about whether the company can quickly win back market share from Apple Inc's (AAPL.O) iPhone as well as Samsung Electronics Co Ltd's (005930.KS) Galaxy devices and other phones powered by Google Inc's (GOOG.O) Android operating system.

Some investors say the company must now look at all of its options, from a sale of the whole company to a sale of parts. Its valuable patent portfolio and high-margin services business could draw interest from technology companies.

But private equity firms have circled the company for more than two years and have tried without success so far to figure out ways to structure a deal.

Moreover, Ottawa reviews any big takeover of a Canadian company for competitive and national security reasons. Government officials have often said they want BlackBerry to succeed as a Canadian company, but concede they do not know how things will play out.

(Editing by Paritosh Bansal and Chris Gallagher)

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Comments (7)
fourthletter wrote:
Why buy a company in free fall? Someone like LG, Lenovo or Samsung will buy them up for patents then disolve the company.

Aug 09, 2013 9:14am EDT  --  Report as abuse
Chair wrote:
This is an article that is a pure example of how the news media has gone totally astray. A breaking news, exclusive about a perceived “change in tone” on a board. No deal is being made, they haven’t the money to buy the company themselves so some un-named and un-mentioned entity is going to have to pony up with the cash, which is doubtful given the lack of success of the much-awaited (by the press and Blackberry fanbois) updated handsets. I understand there are only a limited number of stories out there that matter and that the hack writing the article needs to feed his family, but come on! And the state of the stockmarket players who immediately purchase RIM stock on this non-news item is even more revealing of society.

Aug 09, 2013 10:22am EDT  --  Report as abuse
ajmx58 wrote:
Is not only buying the company, is taking it’s capital out from a naive ignorant market which is ruled by investors that pay attention to every gossip to move the price of an stock. The US market does not like Blackberry, then why do they have to participate in it’s stock market?
They should have done that a long time ago. Is a very good product, which is expanding in every emerging market outside the US.

Aug 09, 2013 10:45am EDT  --  Report as abuse
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