1. thurask's Avatar
    BlackBerry sale to Lenovo killed after firm no from Ottawa - Business - CBC News

    NEW | BlackBerry sale to Lenovo killed after firm no from Ottawa
    Received part of tax refund early in deal one analyst says "may have saved the company"

    CBC News Posted: Mar 24, 2014 5:00 PM ET Last Updated: Mar 24, 2014 5:00 PM ET

    BlackBerry tried to sell itself to Chinese computer giant Lenovo last year. But CBC News has learned the company got a firm no when it approached the federal government to find out if the bid would be approved.

    At the time, the company was told that either Chinese or Russian investment would be met with stiff opposition. So it abandoned the sale.

    But it turned out there was something Ottawa could do to help the beleaguered company. BlackBerry received an early Christmas present from the federal government, courtesy of a remission order � a $696 million US ($767 million Cdn) early payment of part of its tax refund.

    The infusion was a boon to the company, which at the time was burning through its cash reserves and attracting investors who were betting big money it would fail.

    Another rough year for BlackBerry

    Last year was one of crisis for the company, which saw the launch of its much-anticipated Z10 and Q10 phones. But that launch was a flop, forcing the company to take huge writedowns on unsold products and report losses that saw it burn through its previously flush cash reserves.

    "It was snowballing pretty out of control," says Peter Misek, a BlackBerry analyst and managing director with Jefferies. "Within the company, within Waterloo, there was devastation and there was glee amongst short sellers.

    "It was kind of sad because thousands of people stood to lose their jobs."

    In August of last year, the company put itself up for sale. It was at that time Lenovo, among others, started kicking the tires, inquiring about a potential sale. When BlackBerry asked the federal government whether the deal would be approved, Ottawa said no and the possible sale was quickly and quietly killed.

    By Sept. 20, when the company announced it would lay off 40 per cent of its staff, its cash reserves had plunged to $2.6 billion US, $500 million lower than they were just three months earlier.

    At that rate, the company would have been out of money in about a year, as the market was rapidly losing confidence and consumers seemed hesitant to buy new phones from a company seemingly on the way out.

    Cash reserves rebounded

    By the end of the year, however, BlackBerry's cash reserves had rebounded, and were sitting at $3.2 billion US.

    That was in large part due to the backing of one investor � Prem Watsa of Fairfax Financial, who organized a $1-billion US financing effort and brought turnaround expert John Chen on as the company's new CEO.

    But another huge chunk of cash � $696 million US � came from an early payment of its spring tax refund by both the federal and Ontario governments last November, in what's called a remission order.

    According to BlackBerry's publicly available management discussion and analysis filing, during the third quarter the company "took steps to accelerate the receipt of a portion of the tax refund to which it is entitled".

    It arranged with both levels of government to receive the majority of its tax refund ahead of time, and receive the remainder, which BlackBerry estimates at $170 million US ($187 million Cdn), later this year.

    According to Misek, that extra payment had a massive impact, saying "it might have saved the company � we might look back in a year or two, whatever BlackBerry becomes, and say that was the day they saved the company".
    This Friday is going to be an interesting day...
    Corbu, potatoguy and eldricho like this.
    03-24-14 04:42 PM
  2. anon(3896606)'s Avatar
    Heh, $696 million as "part" of it's tax refund.
    Darn.
    03-24-14 04:48 PM
  3. europolska00's Avatar
    Didn't we know this all ready?

    Posted via CB10
    03-24-14 05:25 PM
  4. SmellWhole's Avatar
    This shows that BlackBerry will not be allowed to fail. If BlackBerry was going to be out of business soon because "no one" cares about BlackBerry, the Lenovo sale would have had the government's blessing.
    03-24-14 05:41 PM
  5. SmellWhole's Avatar
    PS - I think the United States of NSA should be added to the list of countries which will be blocked from buying BlackBerry.
    neteng1000 likes this.
    03-24-14 05:42 PM
  6. eldricho's Avatar
    Moneeeey, sweeet moneeey
    Can't wait for Friday

    Posted via CB10
    03-24-14 06:32 PM
  7. Troy Tiscareno's Avatar
    Didn't we know this all ready?
    Yes, we did. None of this is new information - it's just a summary of recent events.

    The problem is: BB has done everything it could to maintain cash in the bank - borrowing $1.25B & getting their tax refund early last Q, and selling real estate this Q, but that's not sustainable, and is essentially masking the real issue, which is that BB continues to bleed money at a very rapid rate. It's good that they survived, but the trajectory is still heading down. BB needs to increase sales and increase revenues, because there aren't really any financial tricks left for them to stave off the reality of their sales numbers.
    Lusitano17 likes this.
    03-24-14 07:35 PM
  8. JonCBK's Avatar
    Yep, but they are restructuring to reduce costs. And the huge layoffs, while sad for the employees, is going to start reducing that burn rate. Their enterprise activities are, I think, high margin. They are just being dragged down by the handset losses. But that issue is getting addressed mainly by cutting down on their handset manufacturing.

    Posted via CB10
    03-27-14 10:06 PM
  9. Dunt Dunt Dunt's Avatar
    Yep, but they are restructuring to reduce costs. And the huge layoffs, while sad for the employees, is going to start reducing that burn rate. Their enterprise activities are, I think, high margin. They are just being dragged down by the handset losses. But that issue is getting addressed mainly by cutting down on their handset manufacturing.

    Posted via CB10
    They are cutting cost (some was fat, and some was meat) in order to survive long enough to see if any of these products can be turned into money makers. BB10 Devices, BES Licenses, BBM w/ Channels.... so far none of them appear to be making any headway into their respective markets.

    Cutting down on handset manufacturing doesn't address the real problem of fewer people are buying your product each quarter. As the fiasco with T-Mobile shows, you can shrink down to a point where you become irrelevant to the market.
    04-03-14 09:14 AM

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