Lenovo Reportedly Seeking Again to Buy BlackBerry

By Todd R. Weiss  |  Posted 2014-10-20 Print this article Print

The previous concerns of the Canadian government and others about security if China-owned Lenovo struck such a deal aren't necessarily new, said King. "The points about security concerns, that is an issue, but frankly the same issue came up when Lenovo and IBM said they were going to doing the System x deal, and it was resolved successfully by outside auditors."

That eventual approval for the Lenovo IBM System x deal could "actually serve as a springboard for Lenovo," he said. The IBM System x unit is a supplier of server systems to the U.S. Department of Defense, so there were military and security concerns about the deal for the technology. Initially, there was resistance to the purchase, but the deal was assessed by federal agencies and was found to be acceptable, according to King.

"Lenovo could argue that that was in effect a seal of approval and could convince Canadian authorities that it is OK," said King.

In addition, the U.S. government allowed Lenovo to purchase IBM's PC business back in 2005 for $1.25 billion. That deal was at the time was one of the largest acquisitions ever of a U.S. company by a Chinese company. Today, Lenovo has major sales and research headquarters in North Carolina, and it has completed the construction of a manufacturing facility there.

Another analyst, Dan Maycock of OneAccord Digital, told eWEEK that the only way that such a deal could ultimately gain approval is if Lenovo "finds a way to separate the security issues from the mobility business. Right now they are closely intertwined, but it doesn't mean they always have to be," he said.

Without those kinds of changes, Maycock said, "there's no way on Earth that Canadian regulators will approve the company holistically being sold to Lenovo" because of security worries when it comes to the Chinese government. "I don't think that Canadian regulators trust Chinese owners essentially" due to the use of BlackBerry products by government and military agencies around the world, he said.

"But I'm not saying it's impossible," said Maycock. "The security components would have to go somewhere else. I don't think they would transfer the whole company. That's not going to happen."

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 6 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 to a modest net profit of $23 million earned in the first fiscal quarter of 2015, which ended May 31.

The new BlackBerry Passport smartphones for enterprise users sell for $599 and include a full HD display that is 4.5 inches square, which will allow 60 characters to be typed across its screen, compared with about 40 for a typical smartphone, according to BlackBerry.


Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel