Introduction
Anyone remember Research In Motion? Known as Blackberry today, Canadian device maker RIM was the pioneer of the smartphone device. In recent years, Blackberry has struggled to compete against Apple and the Android. The shares have dropped from a peak of 144+ in 2008, when Blackberry was its peak, to 8.03 today. Two weeks ago, Blackberry announced an intent to get acquired for $4.7B at $9 a share by Fairfax holdings. Fairfax already holds 10% of Blackberry. I am wondering what's in it for all the parties involved.
Blackberry today
Blackberry has struggled to hold a position in the market as companies such as Apple, Samsung, and HTC have taken over the smartphone space. BlackBerry has just reported a $935 million hit in Q2 due entirely to what it's calling a "Z10 Inventory Charge" -- in other words, a loss associated with creating a stock of flagship handsets that subsequently failed to sell. This single loss was enough to wipe out much of the company's quarterly revenue of $1.6 billion. Most of the new Z10 and Q10 remain unsold. For his part, Thorsten Heins says he's "very disappointed" with the results, but he claims the company saw growth in enterprise server (BES 10) customers and he insists there's still a future in that side of the business -- a future that could soon belong to someone else.
The Fairfax offer
BlackBerry has just announced that it's signed a letter of intent agreement for a sale of the company valued at $4.7 billion to a consortium led by Fairfax Financial (the company's largest shareholder). Pending due diligence that's expected to be completed by November 4th, the deal would see BlackBerry go private, with shareholders each receiving $9 per share in cash.
Prem Watsa and Fairfax
Prem Watsa is the founder, chairman, and chief executive of Fairfax Financial Holdings, based in Toronto, Ontario. He has been called the "Canadian Warren Buffett" by some during successful periods of investing. It invests in everything from insurance to restaurants to sporting goods; the company owns insurers Crum & Forster and OdysseyRe in the U.S., as well as a stake in the Bank of Ireland.
Interest from Google?
A Reuters report late on Friday that the Waterloo, Ontario-based company is in talks with Cisco Systems, Google Inc and SAP about selling them all or parts of itself. I assume that this interest is based on the upcoming field of Enterprise mobility as more and more employees have started buying smartphones and tablets.
(Read more about Blackberry Enterprise Mobility @ http://www.benzinga.com/news/13/10/3970642/blackberry-offers-preview-of-cloud-based-enterprise-mobility-at-gartner-symposium)
Final Word
What do you think? Why does Prem Watsa or Google want to spend close to $5B on a failed Smartphone manufacturer?
Anyone remember Research In Motion? Known as Blackberry today, Canadian device maker RIM was the pioneer of the smartphone device. In recent years, Blackberry has struggled to compete against Apple and the Android. The shares have dropped from a peak of 144+ in 2008, when Blackberry was its peak, to 8.03 today. Two weeks ago, Blackberry announced an intent to get acquired for $4.7B at $9 a share by Fairfax holdings. Fairfax already holds 10% of Blackberry. I am wondering what's in it for all the parties involved.
Blackberry today
Blackberry has struggled to hold a position in the market as companies such as Apple, Samsung, and HTC have taken over the smartphone space. BlackBerry has just reported a $935 million hit in Q2 due entirely to what it's calling a "Z10 Inventory Charge" -- in other words, a loss associated with creating a stock of flagship handsets that subsequently failed to sell. This single loss was enough to wipe out much of the company's quarterly revenue of $1.6 billion. Most of the new Z10 and Q10 remain unsold. For his part, Thorsten Heins says he's "very disappointed" with the results, but he claims the company saw growth in enterprise server (BES 10) customers and he insists there's still a future in that side of the business -- a future that could soon belong to someone else.
The Fairfax offer
BlackBerry has just announced that it's signed a letter of intent agreement for a sale of the company valued at $4.7 billion to a consortium led by Fairfax Financial (the company's largest shareholder). Pending due diligence that's expected to be completed by November 4th, the deal would see BlackBerry go private, with shareholders each receiving $9 per share in cash.
Prem Watsa and Fairfax
Prem Watsa is the founder, chairman, and chief executive of Fairfax Financial Holdings, based in Toronto, Ontario. He has been called the "Canadian Warren Buffett" by some during successful periods of investing. It invests in everything from insurance to restaurants to sporting goods; the company owns insurers Crum & Forster and OdysseyRe in the U.S., as well as a stake in the Bank of Ireland.
Interest from Google?
A Reuters report late on Friday that the Waterloo, Ontario-based company is in talks with Cisco Systems, Google Inc and SAP about selling them all or parts of itself. I assume that this interest is based on the upcoming field of Enterprise mobility as more and more employees have started buying smartphones and tablets.
(Read more about Blackberry Enterprise Mobility @ http://www.benzinga.com/news/13/10/3970642/blackberry-offers-preview-of-cloud-based-enterprise-mobility-at-gartner-symposium)
Final Word
What do you think? Why does Prem Watsa or Google want to spend close to $5B on a failed Smartphone manufacturer?
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