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Is BlackBerry Finished?



November 10, 2013 – Comments (1) | RELATED TICKERS: AAPL , BB , GOOGL


Shares of smartphone manufacturer BlackBerry (NASDAQ:BBRY) have taken a big hit due to failed bids to buy out the company.  With an increasingly competitive smartphone market slicing into BlackBerry’s market share, is the company now doomed, or is there a glimmer of hope for the embattled BlackBerry?

A Very Abbreviated Account of the Bad News

Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) are mopping the floor with BlackBerry in the international smartphone battle, big time.  The failed bids would have given BlackBerry a stronger position to attempt rebuilding itself.  The company's restructuring efforts might eat away the cash balance further down the road.

A Very Abbreviated Account of the Good News

BlackBerry’s new CEO has good experience under his belt and a long-term focus on strengthening the company. The new convertible debt deal will allow the company more time to ramp up restructuring efforts and focus on research and development. BlackBerry does have social presence through BBM, a strong patent portfolio, and millions of subscribers.

The Bottom Line

BlackBerry is not finished yet and does have some positives going for it even amidst the turmoil. The road ahead for BlackBerry will certainly be a challenging one to navigate. I'd advise staying out of this high-risk turnaround play for now as BlackBerry has done a smashing job of destroying shareholder value over the past few years. There are no tangible indicators that BlackBerry's new CEO will do any better than the previous one. There’s plenty of time left to get in to BBRY stock if the company can indeed stage a turnaround, but at this early stage, with no major catalysts on the horizon, BBRY stock is a liability to any portfolio.


1 Comments – Post Your Own

#1) On November 11, 2013 at 12:59 AM, valunvesthere (23.13) wrote:

Chen's task as interim CEO mirrors Sybase revival

Executive says he isn't planning to negotiate quick sale of firm 

By Hugo Miller and Aaron Ricadela, Bloomberg November 5, 2013

John Chen takes over a company that's lost 95 per cent of its value since mid-2008.Photograph by: Richard Drew, The Canadian Press, The Associated Press Files , Bloomberg

Fifteen years after saving Sybase Inc. from its death spiral, John Chen is being called upon to revive a beaten down BlackBerry Ltd.

Chen, 58, was named interim chief executive of BlackBerry Monday after the collapse of a proposed $4.7-billion buyout. He takes over a company that's lost 95 per cent of its value since mid-2008, as the mobile world shifted to touchscreen smartphones and tablets and away from BlackBerry's emailcentric devices.

It's a familiar setting for Chen. When he assumed control of Sybase in 1998, the software maker was in the midst of a restructuring, had announced plans to cut 10 per cent of its workforce and was trading near a record low. In 2010, he sold Sybase to SAP AG for $5.8 billion, more than six times its value at the start of his tenure. Chen won't have that long to engineer a turnaround at BlackBerry, with the company planning a $1-billion convertible bond sale as it burns through cash.

"John Chen knows how to manage a mobile company and, perhaps more importantly, can make things happen in the industry," Jack Gold, an industry analyst, wrote in a report Monday. He can "bring either new growth to the company or position the company to be acquired at a higher premium than it can currently demand," Gold wrote.

BlackBerry, based in Waterloo, Ont., saw its shares tumble $1.34 or 16.56 per cent to close

at $6.75, its lowest level in a decade, after Fairfax Financial Holdings Ltd. abandoned a takeover plan, leaving the company to tap the debt market. Chen will become interim CEO while BlackBerry seeks a permanent replacement for Thorsten Heins, who is stepping down.

Chen, who served on former president George W. Bush's export council and is a board member at Wells Fargo & Co. and Walt Disney Co., said he isn't just planning to negotiate a quick sale.

"I'm not going to look for somebody to do a deal," Chen said Monday. "I'm going to focus on making the business better. There are lots of assets in the company, and there are some really good things happening, and we need to find a way to broaden it, monetize it and serve the market a little better and more aggressively."

Asked if he might close the money-losing handset business, Chen said he isn't ruling anything out. "I'm more focused on making sure our businesses are healthy and growing," he said.

Chen, a native of Hong Kong, joined Sybase in 1997 and left in 2012, two years after the Dublin, Calif.-based company was acquired. Sybase, the second-biggest acquisition for SAP, armed the German software maker with mobile technology that helped fuel co-CEO Bill McDermott's plan to bring its financial and supply-chain management software to iPads and other devices.

After leaving SAP, Chen was appointed senior adviser at private-equity firm Silver Lake Management LLC. While he is still listed on Silver Lake's website, BlackBerry didn't mention the affiliation in Monday's statement. Prior to Sybase, Chen held executive positions at Siemens AG, Pyramid Technology Corp. and Burroughs Corp.

Prem Watsa, the CEO of Fairfax, said the firm is betting on Chen after he proved himself in turning around Sybase. Fairfax, BlackBerry's largest shareholder, will invest $250 million in the convertible debentures.

"Sybase's stock price was down 90 per cent when he took it over," Watsa said today in an interview. In the 12 years Chen ran Sybase, he rebuilt the company and rewarded investors, Watsa said.

"That's just outstanding performance. That's what John Chen brings here."

© Copyright (c) The Vancouver Sun


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