BlackBerry's Best Survival Plan Is as Private Business Phone Maker

NEWS ANALYSIS: Fairfax Financial Holdings’ letter of intent offering $9 per share to take the mobile phone maker private looks like the most viable option for BlackBerry.

It’s hard to believe that it was only six months ago when BlackBerry started selling the new Z10 touch-screen phone in the United States, which the company claimed would help it reclaim its place as a leader in the smartphone market.

The new BlackBerry 10 phone was greeted with enthusiasm with its slick new operating system, its well-designed hardware and a growing collection of apps. But despite the initial promise, sales fell short, the stock price collapsed and even the staunchest BlackBerry fans had to wonder if the company would survive at all.

Then, on Sept. 20, the same day that Apple launched the latest version of the iPhone, BlackBerry announced a $1 billion quarterly loss and that it was laying off 40 percent of its employees. BlackBerry’s battered stock tanked. The clamor of nay-sayers rose to a deafening pitch. BlackBerry is a dying company, many said.

But BlackBerry isn’t dead yet. But it is going private. A lot of the reason for the move, announced on Sept. 23, is to escape the investor panic that is steadily eroding the company’s value. The idea is that by working with Fairfax Financial Holdings to buy out the public stock at a slight premium, BlackBerry will get the peace and quiet it needs to really restructure and get its business into shape to either come back or to sell itself to some other company.

The company has said little about its decision to takes itself private. What little was said about the future of BlackBerry came from Prem Watsa, CEO and chairman of Fairfax Holdings who is also a former BlackBerry board member.

“We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees. We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world.”

You’ll note that there was no mention of BlackBerry’s consumer business in that statement, and that’s important. If BlackBerry still retains an edge, it’s with large corporate users, governments and in the financial services industry where security and reliability are paramount. This is also the market where BlackBerry was born and the market that fostered much of BlackBerry’s initial growth.

This likely means that BlackBerry is intent on returning to its roots where what matters most is security. This is the one area where BlackBerry’s technology sets it apart from its competition, as evidenced by the fact that it’s the only phone that is certified by NATO to handle classified information. It’s no coincidence that nearly all of the Fortune 500 still maintain BlackBerry Enterprise Server networks.

By working with Fairfax Holdings to get itself away from Wall Street, BlackBerry will be able to move beyond the tyranny of quarterly results. That move will theoretically give the company the breathing space it needs to consolidate its strengths and become a leaner, more focused company.