BlackBerry CEO: Sale of Company to Chinese Firm Unlikely

 
 
By Todd R. Weiss  |  Posted 2014-12-06 Print this article Print
 
 
 
 
 
 
 
John Chen

CEO John Chen said he couldn't allow a Chinese company to acquire BlackBerry due to legal concerns from Western nations, including the U.S.

BlackBerry is still cruising along, but if a bid to buy it were offered, CEO John Chen said that it should not come from China because legal issues in Western nations could scuttle such a sale.

Chen made his comments about potential BlackBerry sales scenarios in an interview on Bloomberg TV, according to a Dec. 4 report by Bloomberg.

"We probably are unable to do that," Chen said of a potential sale to a Chinese company, according to the Bloomberg report on the interview. "One of our biggest install bases is government in the so-called Five Eyes countries, where governments share intelligence. I think there will be a lot of regulatory issues and concerns."

The Five Eyes nations—the United States, Canada, the United Kingdom, New Zealand and Australia—share an intelligence agreement that dates back to World War II. Concerns about Chinese companies buying American companies have been around for a long time, due to security and intelligence issues.

At the present time, Chen said he has "no takeover offers on his desk" for his $5.8 billion company, according to the Bloomberg report. "Talk is not an offer. I would prefer to build a lot of value before I even contemplate [selling]."

Chen's comments come on the heels of an acquisition rumor that surfaced in October, when Chinese tech company Lenovo was said to be interested in buying BlackBerry, according to an earlier eWEEK report. It was the second time in a year that such rumors had surfaced.

The previous rumors arose in November 2013, but were reportedly dashed by Canadian authorities due to security and other concerns. Canadian regulators said that they "would not approve a Chinese company buying a company deeply tied into Canada's telecom infrastructure," according to the earlier report.

The October rumor called for Lenovo Group to make an offer for Canadian-based BlackBerry at $15 per share, according to a report by Benzinga.com, a financial Website.

Much of the environment for such rumors came in January 2013, when Lenovo Chief Financial Officer Wong Wai Ming told Bloomberg that Lenovo is always "looking at all opportunities," including BlackBerry and others.

Smartphone maker BlackBerry has been a target for Lenovo because, by acquiring the company, Lenovo would pick up yet another large potential market for additional sales.

BlackBerry's fall from dominating the enterprise smartphone market has been swift and stunning. BlackBerry spent much of 2012 and 2013 trying to shake off the image that it was finished, especially compared with its presence five years earlier when its devices were the "enterprise gold standard" for mobile business communications. In early 2006, half of all smartphones sold were BlackBerry models. By 2009, though, its share of the global smartphone market was down to 20 percent.

In September, BlackBerry's latest Passport smartphones sold out within six hours after their announcement on BlackBerry's own Website and within 10 hours on Amazon.com after they went on sale in September, according to an earlier eWEEK report.

That successful preorder news for the Passport phones was a positive sign for BlackBerry, which also announced on Sept. 26 that its revenue dropped to $916 million in the second quarter of fiscal 2015, down from $966 million in the first quarter.

The company also posted a GAAP net loss of $207 million for the second quarter, which ended Aug. 30, compared with a $965 million loss in the same quarter of 2013, according to a financial statement released by BlackBerry on Sept. 26. Those figures compare with a modest net profit of $23 million in the first fiscal quarter of 2015, which ended May 31.

In November, BlackBerry offered all iPhone users rebates of up to $550 to replace their iPhones with one of BlackBerry's new Passport smartphones. The offer is good through Feb. 13, 2015.

The company is expected to release its latest smartphone, the BlackBerry Classic, formerly known as the BlackBerry Q20, sometime this month.

 
 
 
 
 
 
 
 
 
 
 
 
 

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