BlackBerry Pleads With Customers, Partners for Patience, Confidence

By Wayne Rash  |  Posted 2013-10-15 Print this article Print

One such offer, widely reported to be from BlackBerry founders Mike Lazardis and Douglas Fregin, could be seen as a viable alternative to the Fairfax offer. Or the founders could join Fairfax in taking the company private.

However there are limits to what potential buyers the Special Committee can work with. BlackBerry is a Canadian company, and Canadian laws would effectively limit the sale of BlackBerry to a foreign company. In addition, BlackBerry’s secure servers are located in Canada, and Canadian laws also limit foreign ownership of those assets.

The limits on who can take over ownership of BlackBerry effectively eliminates a number of takeover scenarios. So while Google, for example, may pass muster on buying part of the company, it’s unlikely that Google or any of the other companies frequently listed as buyers of BlackBerry could actually do so under Canadian law.

Instead what seems most likely is that Fairfax Holdings in coordination with Lazardis and Fregin, will band together to raise the billions of dollars necessary to buy the outstanding shares of BlackBerry. This may be slightly easier than it might seem because the principals already own about 20 percent of the company. Accomplishing this would require the participation of major Canadian investors who see potential for long-term profits.

While it may seem unlikely that the purchase could actually happen that way, it’s important to remember that despite its woes of late, BlackBerry is actually in very strong financial condition. The company has about $2.5 billion in cash and no debt. By cutting costs, which the company has already planned to do through a reorganization, BlackBerry can continue on for a very long time without being profitable.

During that time, BlackBerry has the opportunity to reform its operations so that they make sense. Currently the company is taking a shotgun approach by trying to appeal to any market where it could conceivably make money, including those that are outside its core enterprise arena. To some markets BlackBerry is a secure communications device with a network to back it up. But to other markets the company is presenting itself as a game machine and to others as a social networking device.

At some point, the company will need to define what it really is and focus on the markets with the most potential for profit while reducing its attention to markets that simply don’t make sense. For example, it remains unclear why a mobile device maker with roots in security and productivity would be bringing out a vast collection of games while ignoring major productivity apps. Regardless of the rationale, BlackBerry needs to decide which markets have the most potential. Without that focus, the company is going to have trouble making its comeback.


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