BlackBerry's (NASDAQ:BBRY) board is considering taking the company private, according to a Reuters report, which could give the company more breathing room to execute its turnaround without needing to please investors.
The report, citing unnamed sources familiar with the matter, said that no deal is imminent, and noted that Blackberry could struggle to find a buyer, in the private equity world or elsewhere, to help take the company private.
A BlackBerry spokeswoman declined to comment. The report sent BlackBerry's shares up in Friday morning trading.
The report said CEO Thorsten Heins and the company's board are increasingly warming to the idea that taking the company private would put less pressure on the turnaround. "There is a change of tone on the board," one of the unnamed sources said.
BlackBerry's market value has fallen to $4.8 billion, down from $84 billion at its peak in 2008, but it could still be a tough sell amid operating losses and a decline in subscribers. The report said that BlackBerry recently held talks with private equity firm Silver Lake Partners about a potential collaboration in enterprise computing, but not about a takeover. Silver Lake is part of an ongoing fight to take Dell private. The firm declined to comment, according to Reuters.
Wells Fargo analysts Maynard Um and Munjal Shah wrote in a research note that "it is difficult to rule out the possibility of a take private or acquisition. However, we believe BlackBerry does not necessarily need to go private in its transformation, though it will need to be markedly more disciplined and quick in righting its cost structure to the reality of being a much-smaller revenue-generating entity--something that private equity would also likely implement."
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.
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 rumored to be working on a high-end model, variously dubbed the A10 and Z30, to be released toward the end of the year. Meanwhile, new pictures surfaced of the device, showing a 5-inch 720p HD display.
In a bit of bright news for BlackBerry, the company said the U.S. Defense Information System Agency approved the Z10 and Q10 smartphones with BlackBerry Enterprise Service 10 for operation on the Department of Defense network.
- see this Reuters article
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Engadget article
- see this BGR article
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