[Bla1ze]

Exclusive: BlackBerry open to going private, sources say | Reuters

Chief Executive Thorsten Heins and the company's board is increasingly coming around to the idea that taking BlackBerry private would give them breathing room to fix its problems out of the public eye, the sources said.

"There is a change of tone on the board," one of the sources said on Thursday.

No deal is imminent, however, and BlackBerry has not launched any kind of a sale process, the sources said. Even if it tried, BlackBerry could find it hard to come up with a buyer and the funding to go private. With the company still posting losses and bleeding subscribers, private equity firms and other buyers may not want to step up.

Interesting but alas, nothing substantial until it happens really.

[ealvnv]

I think that'll be the best that can happen, and surely hope it does

[a1s2d3f4g5]

Interesting, thanks.

Honestly imo it would be a good move for BlackBerry, as the quarterly earnings reports damage the company reputation.

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[thurask]

Interesting. Should stave off the vulture capitalists that pop up every shareholder meeting.

[Lobwedgephil]

They definitely need to consider this.

[Tre Lawrence]

Interesting.

[trwrt]

Interesting. Should stave off the vulture capitalists that pop up every shareholder meeting.

Where do you think they'd get the money to buy out all the shareholders?

[laketrout73]

The added stability of going private would give confidence to corporate and government customers that they need not worry about a takeover or breakup of BlackBerry. There's probably many I.T. departments nervous about moving to BES10 or implementing BB10 devices not knowing the long term viability of BlackBerry.

Z10 STL100-3 | 10.1.0.4633 | Bell

[megirl316]

What does this mean for a BlackBerry consumer who doesn't use a BlackBerry for work or corporate world?


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[leafs123]

What does this mean for a BlackBerry consumer who doesn't use a BlackBerry for work or corporate world?


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It shouldn't mean anything. They'll still make products, just won't be a public company and the finances won't need to be publicized.

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[ibpluto]

What does this mean for a BlackBerry consumer who doesn't use a BlackBerry for work or corporate world?


Posted via CB10

Means nothing to the average Joe. All it means is Blackberry can choose what, when or if they report anything. It also means the company can take difficult matters and internalize them keeping them out of the news. No longer are profits for its shareholders front and ceter, but private companies tend to focus on the long term, because the goal is not extracting every cent from current fiscal years, its about long term viability (take a hit today to flourish tomorrow). That could mean retaining employees when times are slow or spending more on R&D because the bottom line is not reported.

Public companies are ways for founders to make killer amounts of money on their IPO's and for investors to bleed out money from growth. I think Berry going Private would be a good thing for them, it would give them a chance to reload without every cent they make or don't make being disected in the news by condecending media pricks

[Geeoff]

I can definitely see the benefits of going private. They would not have to worry about short term performance and instead could focus on long-term strategies. As well, people who claim that "Blackberry is dead" would have less information to go on. In addition, I like the fact that the board is starting to consider different strategies (personally I'm still a fan of a strategic partnership with Sony, while licensing BB10 to other manufacturers like Samsung).

However, I really hope that they are not trying to hide more problems by going private. I tend to be an optimistic person and I thought that Blackberry has some good things happening. If they need to go private to make some changes then that raises the question for me: why?

[njblackberry]

If BlackBerry goes private they would be trading one group of owners (shareholders) for another (those that put up the money to buy the shares).

That would be many large investors, bankers or hedge fund operators. BlackBerry the company can't buy all the shares without funding.

And the lenders, who will put some of their people into the company (CFO, COO) will expect a certain rate of return so they can pay off their loans.

This is something struggling companies do. It is not a sign of good corporate health. And what would happen to that $3bn. It would go to pay down debt. Replace that vaunted cash hoard with debt.

The good news is that they wouldn't have to publicly report earnings, subscriber losses, cutbacks or executives leaving. They would still have to answer to their new owners. And the new ownership may want to sell off some parts to cut the debt.

[greggebhardt]

It shouldn't mean anything. They'll still make products, just won't be a public company and the finances won't need to be publicized.

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I am not convinced that taking the finances behind closed doors is good in the long term.

It could be but then is may not.

It would be allowing the same guy that said "We have a clear shot at being the No. 3 platform in the market", to be even more secretive.

Sorry but my trust evaporated after the last ER when it was plain that TH lied and misled the stockholders.

[ibpluto]

If BlackBerry goes private they would be trading one group of owners (shareholders) for another (those that put up the money to buy the shares).

That would be many large investors, bankers or hedge fund operators. BlackBerry the company can't buy all the shares without funding.

And the lenders, who will put some of their people into the company (CFO, COO) will expect a certain rate of return so they can pay off their loans.

This is something struggling companies do. It is not a sign of good corporate health. And what would happen to that $3bn. It would go to pay down debt. Replace that vaunted cash hoard with debt.

The good news is that they wouldn't have to publicly report earnings, subscriber losses, cutbacks or executives leaving. They would still have to answer to their new owners. And the new ownership may want to sell off some parts to cut the debt.

Except that if internal expectations are set lower than those of exernal public investors (which is generally the case), it allows for debt management and repayment. typically, in these cases there is a pre-determined understandaing of business direction, and that course typically is allowed to run its course. Investors buying in will contractually have an understanding as to what the debt repayment needs and rate of repayment to be. If those goals are not being met, then yes, it can and will lead to sell off of assets or further cost cutting to meet internal shareholder targets. Been part of these before, and this is a simplified note, but its all about the up front pre-determeined minimum requirements in repayment and ROI for the private investors. Everything else is gravy.

It would not suprise me if the company is taken private, nursed, portioned, then brought back to an IPO in whole or in part. Either way, this company needs (at least financially) to get out of the spotlight that is the public market

[njblackberry]

Either IPO or sold off. Either way, if taken private, BlackBerry as it exists today (good and bad) will be changed forever.

[sosumi11]

First Dell, now BlackBerry.

Pattern?

[chaibon]

Even though it is painful to see that BBRY share price dropped significantly, for any who true believer of the company's turnaround story, buyout is not a preferred option. At current depressed share price and bleak outlook, I doubt that there will be much added premium in the potential buyout price. Heck, I am just break-even at the pre-drop price.I wonder if buyout happens, a shareholder can choose to keep his or her shares instead of having to relinquish them...

Another thing is for all the shareholders who have been through thick and thin with the company, why can't BBRY give a $100 manufacturer's rebate toward the purchase of Z10 to those who own BBRY stocks?

[chrysaurora]

I think going private is in BlackBerry 's best interest. As a public company, they have an enormous short interest. That is, if you think about it, a lot of very wealthy people hoping for BlackBerry to die/go bankrupt. To that end, they do their best to tarnish BlackBerry 's image.

Not only that brings stock price down but that also hurts BlackBerry 's business as customers become wary of BlackBerry 's future. So, while shorts just want to get stock price down, the reality is that such negativity also hurts BlackBerry sales.

Those two things keep feeding off each other.

Negative news spin > hurts sales > generates more negative news > hurts even more sales

As a private company, they'd (with one stroke), take away incentive from such negative news spinners, image tarnishers. Wall st short sellers /traders will have no reason to spread any negative news, they'd move onto some other trade.

And BlackBerry will be free to do business as they choose. They'll surive or peril but they'd be free of most (if not all) external short-sighted pressure of Wall St and their henchmen (paid media etc). BlackBerry will be able to execute it's long term strategy.



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[m1a1mg]

Dell hasn't gone private yet. It's still in the works. And Dell is different. They have two fighting for them. Not sure where BBRY stands on that.

I found this on WSJ. Pretty interesting:

Friday was the latest episode of investor pushing shares of BlackBerry Ltd.BB.T +6.73% higher on hopes the company will sell itself.

A deal still probably isn’t likely.

Reuters reported Friday that the BlackBerry board has had a “change of tone” and is “increasingly coming around” to the idea of a deal with the private-equity industry.

That was enough to get shareholders excited, sending the stock up 4% to $9.64 in recent trading and earlier hitting as high as $9.89, a 7.2% gain.

“While we see this as a positive sign that management is considering alternative scenarios to increase shareholder value, we do not see it happening in the near-term,” S&P Capital IQ analysts wrote. “We think management will wait until the company is further along in its turnaround strategy before selling assets or going private, particularly as we expect BBRY to burn cash in the near-term and to continue to lose subscribers over the next several quarters.”

We’ve been here before — as MoneyBeat has chronicled several times. Since announcing a review of strategic options last June, BlackBerry regularly has been subjected to a spike in shares on the hopes it will be rescued.

The company has hired J.P. MorganJPM -0.31% and Royal Bank of CanadaRY.T -0.69%, and at one point said it would consider “whatever model you could think about,” which helps lend credence to any deal rumor or speculation.

But several issues have always stood in the way, not the least being BlackBerry’s tumbling market share, sales and position. Canada’s strong attachment to a national powerhouse has also been a concern for buyers.

To be sure, private-equity firms often find gold in what other investors leave alone. Private equity has long argued that their “financial engineering” and ability to reform a company behind the curtain, without explaining what they are doing to shareholders, can make a turnaround seemingly easier.

That’s the argument that Dell Inc.DELL -0.22% and Michael Dell have made.

But the idea a firm would take a bet on BlackBerry, worth nearly $5 billion, may be a stretch.

Private-equity firms load a company up with debt and then use the company’s cash flow to pay down that debt over time, cutting costs and reorganizing operations along the way.

BlackBerry did add to its cash position in its quarter ended June 1 to $1.59 billion from $1.55 billion and boosted its gross margin to 33.9% from the prior year’s 28%.

But its bottom line has evaporated quickly. Two years ago it earned $3.4 billion and watched that go to $1.2 billion then a $646 million loss in the most recent fiscal year ended in March. Wall Street sees per-share full-year losses expanding this year and the next.

Analysts have not been kind either. Morgan Stanley a year ago called BlackBerry “essentially broken” and though hopes were high for the BlackBerry 10 launch, the phone’s flop has led to more cat calls.

More than half of Wall Street analysts rate the firm the equivalent of a sell, according to FactSet while just four rate it a buy. At the start of 2012 only a quarter of Wall Street had the sell rating on it.

Investors may also want to look at what happened in Dell.

Mr. Dell is the founder, chairman and CEO, controls more than 15% of shares and was widely viewed as a “perfect” buyout partner. He had his own PE firm and was putting a lot of capital. His expertise was also highly sought by private-equity firms, and while he struck a deal with Silver Lake he had publicly pledged to work with any other potential bidders as well.

No other bidders emerged.

KKR & Co. looked at a deal after Mr. Dell went personally to George Roberts, but backed away. TPG was brought in and didn’t make a bid. Blackstone Group proposed a potential offer and spent weeks conducting due diligence this spring. What is saw scared Blackstone away.

Private equity has certainly taken some risks and is seeing big gains as WSJ has chronicled in recent weeks. But they avoid deals too.

Like the BlackBerry 10: There may be hype about, but that doesn’t mean there would be a sale.

[mset]

Where do you think they'd get the money to buy out all the shareholders?

Where would who get the money? I-banks and private equity firms have more than enough money to buy the company 100 times over. Their market cap is only 2.9 billion.

[mset]

I wonder if buyout happens, a shareholder can choose to keep his or her shares instead of having to relinquish them...

Unfortunately, you cannot.

[donmateo]

I would rather they go private than sell out

[anon(5789608)]

BB has no ecossystem, sad but true.It's too late to launch services to compete with services from Apple, Microsoft and Google. BB stopped by the time, coz were in the comfort zone.

The only chance is to partner with media companies like Yahoo, not hardware companies. In USA market, will be perfect a Blackberry with Yahoo services.

Yahoo Blackberry Y10.

Microsoft with Nokia and Google with Motorola is growing (and remember, Samsung has grown because Google' Android) . Apple with your own iPhone is decreasing. Logically, Yahoo with Blackberry both will grow

[Mr. Marco]

I'll have good and bad memories of Blackberry just like most. While watching business news channel today, one of the segments was about Blackberry being in dire straits. Basically it boiled down to Blackberry 10 along with the new devices, just didn't do enough of the trick in order to win people back. Boiled down to something like out of ten people buying a smartphone, eight will either buy iPhone or one running Android and two will buy Blackberry.

It's good to have fans and a site like Crackberry pushing and cheering Blackberry on but we all have to be realists. At the end of the day business is business and no matter if you thought Blackberry 10 was the best OS, it just wasn't enough to allow Blackberry to compete.

I think the truth is, outside of a small number of Blackberry loyalists Blackberry with its new devices and OS did not do enough in order to make the general public leave iPhone or Android.