Not with a bang but a whimper

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On Sept. 23, with very little fanfare, a consortium led by Fairfax Financial Holdings Ltd. (FFH), a Canadian financial holding group, announced its intention to acquire BlackBerry Ltd. (BBRY), a Canadian multinational telecommunications corporation. Fairfax is set to acquire BlackBerry by early November, following due diligence and authorization by regulators. The sale will effectively take BlackBerry private. Prior to the announcement, the flagging company was valued at $4.7 billion USD by its board of directors. Analysts estimate that the value of BlackBerry’s patents, cash, certifications, and contracts with governments and major corporations comprises most of the transaction’s value. BlackBerry’s patent portfolio alone is valued at approximately $3 billion USD, and the company possesses $3.1 billion USD cash on hand—a considerable amount. BlackBerry’s non-current assets ($3.4 billion USD) are of little value given its liabilities amounting to an equal $3.4 billion USD.

Among those who find touchscreen keyboards cumbersome, particularly when cranking out email after email, BlackBerry’s characteristic physical keyboards still hold favour. Moreover, despite the “user-unfriendliness” (read: blandness) of the phones, BlackBerry’s designs are renowned for their high level of security. BlackBerry hoped to capitalize on these qualities by transitioning into catering solely to the professional market. “[Professionals] helped build BlackBerry into the leading brand today for enterprise security, manageability, and reliability,” said BlackBerry’s new chief executive, Thorstein Heins, on Sept. 20. However, executives tasked with managing and monitoring smartphone use in the workplace have reported Blackberry products’ steady displacement by iPhones, Android-supported devices, and Microsoft’s (MSFT) Windows phone. One company’s chief operating officer reported less than five per cent of employees using BlackBerry devices. In banking and government, where security is paramount, BlackBerry will likely maintain a presence among high-ranking figures. Elsewhere, its use seems unlikely to recover.

BlackBerry’s failure to recognize its decline in the telecommunications market has been commented on extensively by business journalists and the general media. Its sale is considered a cultural milestone, with many columns paying their respects to the formerly eminent company. Critics in the New Yorker, Financial Times, and Financial Post have portrayed BlackBerry’s dramatic fall as emblematic of the company’s failure to seriously engage with consumers’ capricious preferences, the competition, and recent technological innovations.

For the past four years, BlackBerry has existed within the public’s consciousness mainly as a point of comparison when measuring Apple (AAPL) and Google (GOOG) Android’s business savvy and success. The impact of BlackBerry’s sale on UVic students is likely to go largely unnoticed. Cellphone retailers barely carried BlackBerry models, if they carried them at all. The approximately 72 million remaining BlackBerry users will still have service, but with no new models and relatively plain features, user numbers are expected to dwindle. BlackBerry is a vaguely sentimental afterthought amongst those fond of the company’s products or Canadian business in general; I would posit many of these people don’t own a BlackBerry. Unless BlackBerry can corner the office environment—a very long shot by all accounts—the company will most likely be sold for parts in the near future. At the time of this writing, BlackBerry’s stock is hovering around $7.70 USD, and negotiations have begun with Google (GOOG), Intel (INTC), Cisco (CSCO), LG (KRX: 003550), and Samsung Electronics (KRX: 005930, 005935), who could divide up the faltering company as an alternative to a total acquisition by Fairfax.

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