BlackBerry's (NASDAQ:BBRY) board said it has formed a special committee to explore "strategic alternatives to enhance value and increase scale in order to accelerate BlackBerry 10 deployment." The possibilities for the company include joint ventures, strategic partnerships or alliances or a sale of BlackBerry, the company said.
The special committee will be made up of Chairwoman Barbara Stymiest, CEO Thorsten Heins, and directors Richard Lynch and Bert Nordberg, and will be chaired by Timothy Dattels. The company said there can be no assurance that any transaction will come about as a result of the review, and the company said it does not plan to comment on the process until the board "approves a specific transaction or otherwise concludes the review of strategic alternatives."
The announcement comes less than a week after a Reuters report indicated that the board was considering taking the company private, a move that could give the company more breathing room to execute its turnaround without needing to please investors. Private equity executives told Reuters that such a move could work financially but wouldn't necessarily make the company more competitive.
"We continue to see compelling long-term opportunities for BlackBerry 10, we have exceptional technology that customers are embracing, we have a strong balance sheet and we are pleased with the progress that has been made in our transition," Heins said in a statement. "As the Special Committee focuses on exploring alternatives, we will be continuing with our strategy of reducing cost, driving efficiency and accelerating the deployment of BES 10, as well as driving adoption of BlackBerry 10 smartphones, launching the multi-platform BBM social messaging service, and pursuing mobile computing opportunities by leveraging the secure and reliable BlackBerry Global Data Network."
"Prior media reports have suggested potential buyers as Samsung, Lenovo, and Microsoft. Of the three, we believe Microsoft is the least likely given it has its own ecosystem and the acquisition of BBRY would have significant overlap with very few synergies. However, we expect many companies will take a look even though they may not all be truly interested bidders (i.e., investors should be wary of reports of interest from various companies)," noted Wells Fargo analyst Maynard Um. "While a JV or partnership with another entity, particularly a large one, could help the company, we do not see this as an attractive option as companies, in our opinion, would not be fully vested in BBRY's success relative to an outright acquisition."
During BlackBerry's annual investor conference in July, shareholders questioned Heins about the company's troubles in the U.S. market. One investor even called the U.S. launch of BlackBerry 10 "a disaster." Heins disagreed with that investor's characterization but admitted that the U.S. market is very competitive. Heins argued that BlackBerry is still in the early stages of recovery and that the company will continue to expand its portfolio of BlackBerry 10 smartphones through the next several quarters.
According to research firm comScore, BlackBerry's U.S. smartphone market share slipped from 5.2 percent in the first quarter to 4.4 percent in the second quarter. Research firm IDC said BlackBerry's global smartphone market share fell to 2.9 percent in the second quarter, down from 4.9 percent in the year-ago period. The numbers are concerning considering they cover the period during which BlackBerry introduced a number of devices running its new BlackBerry 10 operating system, a complete overhaul of its smartphone OS.
BlackBerry is in the process of rolling out its Q5 smartphone to complement the Q10 and Z10 models as part of its line of BB 10 devices. Still, the company said it expects to post an operating loss in the current quarter. The company is reportedly working on a new, high-end 5-inch BB10 model, dubbed the Z30, which could come out late this year.
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Article updated Aug. 12 to include additional commentary and analysis.