By Shamika Dighe
Monday marked an important deadline in sealing the fate of BlackBerry Ltd. The struggling smartphone maker was to have finalized bids to take the company private. In September, Fairfax Capital announced its plan to offer $9 per share, a $4.7 billion bid total. BlackBerry co-founders Mike Lazaridis and Doug Fregin, who together own about 8% of BlackBerry, were also reportedly working to submit a joint bid with private equity firm Cerberus Capital and Qualcomm Inc.
The sale process ultimately failed, however. BlackBerry will not be sold to a buyer, rather a total of $1 billion in debt will be sold to Fairfax, BlackBerry’s largest shareholder, and a group of unnamed investors. $250 million in debt will be sold to Fairfax.
Four years ago, BlackBerry Ltd. was a completely different company. With growth rates over 80% per year, Fortune magazine had named BlackBerry the fastest growing company in the world. Since 2009, BlackBerry stocks have fallen 90%, closing at $7.77 as of last Friday. Once so ubiquitous that its devices had been dubbed “CrackBerrys”, BlackBerry currently has a mere 3% of the smartphone market.
BlackBerry announced that it was considering going private in August. This followed a potential plan to split the company into a smartphone division and services division. Then CEO Thorsten Heins however, decided to keep the company together and pursue a new line of smarphones. A month later, BlackBerry announced that it was sitting on $1 billion worth of unsold inventory of devices and planned to cut 4,500 jobs.
The decline of what was once Canada’s most valuable company is a result of BlackBerry’s failure to recognize the trends that would drive the smartphone market in the future. Once favored by corporate and government customers, BlackBerry failed to recognize that the future of the smartphone market would actually be driven by household consumers. In terms of software, BlackBerry missed the growth of the “app economy”, a trend that both Apple and Google have both leveraged to their gain, through their App Store and Android Market respectively. On the hardware side, BlackBerry, whose devices initially gained popularity as one of the first phones to offer a full QWERTY keyboard, was slow to realize that smartphone users preferred touch screens to full keyboards.
Going private would have allowed BlackBerry to try to make a turnaround without the increased scrutiny that comes with being a public company. Former chief executive of enterprise John Chen, who will soon replace Thorsten Heins, stated today that he would need some time to figure out the direction of BlackBerry from this point onwards.
Sources:http://business.time.com/2013/09/24/the-fatal-mistake-that-doomed-blackberry/http://online.wsj.com/news/articles/SB10001424052702303661404579176202182583242?KEYWORDS=blackberryhttp://news.yahoo.com/fairfax-struggles-raise-funds-blackberry-bid-sources-214236605--sector.htmlhttp://www.forbes.com/sites/investor/2010/07/13/will-iphone-and-android-squash-blackberry/http://online.wsj.com/news/articles/SB10001424052702303482504579177491399001678?mod=Tech_newsreel_2