BlackBerry's Chen: Security concerns would likely scuttle a deal with a Chinese company

BlackBerry (NASDAQ:BBRY) CEO John Chen said even if a Chinese smartphone maker offered to buy the company, Western governments likely wouldn't allow it because of BlackBerry's deployment of mobile security software for those governments.

"We probably are unable to do that," Chen said in an interview that was taped on July 23 and will air tonight on Bloomberg TV's "Studio 1.0" program, when asked if he would sell BlackBerry to a Chinese company. "One of our biggest install bases is government in the so-called Five Eyes countries where governments share intelligence. I think there will be a lot of regulatory issues and concerns."

The "Five Eyes" refers to an intelligence cooperation and sharing agreement between the United States, UK, Canada, Australia and New Zealand. BlackBerry has built its reputation for secure mobile devices and software, and top government officials, from President Barack Obama to British Prime Minister David Cameron, use BlackBerry devices. The U.S. government, in particular, has accused China of regular cyber espionage in the corporate world, and has effectively blacklisted Chinese network vendors Huawei and ZTE from gaining network gear contracts with larger U.S. carriers.

In October Benzinga reported that Lenovo might be interested in a bid for BlackBerry. Lenovo CEO Yang Yuanqing said in October that the company has two major deals to digest, Motorola Mobility and IBM's low-end server business, and needs to focus on making those deals profitable.

In November, Chen went to China, where he met with the heads of Lenovo and Xiaomi and indicated that he would like to strike partnerships in the country, the world's largest smartphone market, where security and encryption are in high demand. "It does seem that a more efficient way is to have a good partner to be here," Chen told Bloomberg in November. "I'm here this time to look at what opportunities there may be. We have not really focused on this market. It's a huge market but it's a very highly competitive market too."

Chen said he is not looking to sell BlackBerry and there are no offers for the company. "Talk is not an offer," he said. "I would prefer to build a lot of value before I even contemplate" selling.

For its part, BlackBerry is focused on the rollout of its BlackBerry Enterprise Service 12 platform in the hopes of winning back government and enterprise business. The company is also soon going to be releasing its Classic smartphone with a physical qwerty keyboard. Additionally, as part of a deal with Samsung Electronics, starting early next year, enterprise customers that buy Samsung Galaxy smartphones and tablets embedded with Samsung's Knox software for Android will be able to add BlackBerry's BES12 end-to-end security and encryption solution on top of it.

For more:
- see this Bloomberg article

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