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This move may be several years too late, but BlackBerry announced this morning that it will be exploring “strategic alternatives” for its business through a newly formed special committee.
It sounds like just about anything is on the table. The company is considering a complete sale, joint ventures, and strategic partnerships. While there’s always a chance this strategy exploration could come up empty, the announcement is a sign that BlackBerry is finally beginning to accept its current position in the mobile world.
Despite releasing its BlackBerry 10 platform and devices earlier this year, BlackBerry has seen its market share fall considerably to 2.9 percent (a 12 percent drop from last year), according to IDC. Its poor performance opened the door for Windows Phone to take the No. 3 spot in global smartphone market share, which is now up 78 percent at 3.7 percent.
I called BlackBerry’s flagship Z10 smartphone a “boring beta” in my review — several months later, it doesn’t seem like much has changed. BlackBerry has managed to roll out the keyboard-equipped Q10 smartphone (which is more suitable for its hardcore fans), but sales haven’t been enough to make a dent in its declining market share.
In a statement this morning, BlackBerry chief executive Thorsten Heins noted: “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.”
After a brief flirtation with profits earlier this year, BlackBerry ended up losing $84 million in the last quarter (its first full quarter with BlackBerry 10 on the market). At this point, it seems clear that BlackBerry needs an unexpected hit device (unlikely), a significant partnership (similar to Microsoft and Nokia’s deal), or a very brave suitor if it is to stay afloat.
Press release below:
WATERLOO, ONTARIO, Aug 12, 2013 (Marketwired via COMTEX) — BlackBerry Limited BBRY +5.74% CA:BB +5.68% , a world leader in the mobile communications market, today announced that the Company’s Board of Directors has formed a Special Committee to explore strategic alternatives to enhance value and increase scale in order to accelerate BlackBerry 10 deployment. These alternatives could include, among others, possible joint ventures, strategic partnerships or alliances, a sale of the Company or other possible transactions.
The Special Committee of the Board is comprised of Barbara Stymiest, Thorsten Heins, Richard Lynch and Bert Nordberg, and will be chaired by Timothy Dattels.
With the announcement of the Special Committee, Prem Watsa, Chairman and CEO of Fairfax Financial informed the Company that he felt it was appropriate to resign due to potential conflicts that may arise during the process. Fairfax Financial is the largest BlackBerry shareholder. Mr. Watsa said, “I continue to be a strong supporter of the Company, the Board and Management as they move forward during this process, and Fairfax Financial has no current intention of selling its shares.”
“During the past year, management and the Board have been focused on launching the BlackBerry 10 platform and BES 10, establishing a strong financial position, and evaluating the best approach to delivering long-term value for customers and shareholders,” said Timothy Dattels, Chairman of BlackBerry’s Special Committee of the Board. “Given the importance and strength of our technology, and the evolving industry and competitive landscape, we believe that now is the right time to explore strategic alternatives.”
Thorsten Heins, President and Chief Executive Officer of BlackBerry, added, “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. 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.”
JP Morgan Securities LLC is serving as financial advisor to BlackBerry and Skadden, Arps, Slate, Meagher & Flom LLP and Torys LLP are serving as legal advisors.
There can be no assurance that this exploration process will result in any transaction. The Company does not currently intend to disclose further developments with respect to this process, unless and until its Board of Directors approves a specific transaction or otherwise concludes the review of strategic alternatives.
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