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September 26, 2013

No Earnings Call or Webcast for BlackBerry's Q2 Results

On June 28, 2013, I woke up early enough to have several cups of coffee before sitting in front of my monitor and listening to BlackBerry’s announcement for its Q1 fiscal 2014 earnings results. I was expecting to do the same at the end of this month.

As it turns out, I won’t be doing that, much in the same way that BlackBerry investors will not be receiving the customary conference call. When BlackBerry announces its quarterly earnings tomorrow, September 27, 2013, it will do so rather quietly.

Earlier this week, BlackBerry made an announcement that should come as no surprise to anyone who has been reading my BlackBerry articles. It appears that the selling price for the Canadian company is $4.7 billion. BlackBerry intends to sell itself to a group of investors led by Fairfax Financial.

As of now, BlackBerry has signed a letter of intent for a deal with Fairfax. That letter values the company a $9 per share. While it has signed the letter of intent, BlackBerry wants it to be clear that it will consider other options. 


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These other options come from what BlackBerry calls a “go shop process.” Barbara Stymiest, chairman of BlackBerry’s board of directors, said in a statement, “Importantly, the go shop process provides an opportunity to determine if there are alternatives superior to the present proposal from the Fairfax consortium.”

Unfortunately, doubts about whether or not the deal will go through have caused BlackBerry shares to drop a dollar on Wednesday to $8 per share. However what makes BlackBerry an attractive company to takeover is the fact that it has $2.6 billion in cash, no debt and coveted software and hardware patents.

As for the lack of second quarter information, in a press statement, BlackBerry said “In light of the letter of intent agreement between BlackBerry and Fairfax Financial Holdings Limited that was signed and announced on Monday, September 23, BlackBerry has cancelled its second quarter earnings conference call and webcast. The company will publish further details regarding its second quarter results in the Management’s Discussion and Analysis and consolidated financial statements, to be filed next week.”

A couple of weeks ago I reported BlackBerry’s announcement that it was ready to slash as much as 40 percent of its workforce. If you couple that with the fact that BlackBerry cut half of its U.S. sales staff in July and that it could post nearly $1 billion in losses for the second quarter, well you can see where that road is leading. It is right on the corner of Letter of Intent.

Should the deal go through and the group led by Fairfax does acquire BlackBerry, Prem Watsa, who is Fairfax’s founder and chief executive, told the Associated Press that he does not intend to break up the company or move it out of Canada.

He said, “One of the reasons I went on the board, and I said it publicly, was to keep the company in Canada and to make sure it survives and exists in Canada. It is one of Canada’s most successful companies. Companies do fall on hard times, and they come back again, and we expect this company to do the same.”

When BlackBerry first started as Research in Motion (RIM) it specifically dealt with governments and large corporations. Its security was one of, if not, the best. This is what attracted the U.S. government to issue BlackBerry devices to its employees.

Businesses are still BlackBerry’s most important customers. “BlackBerry is focused on serving users who want to be highly productive at work and on-the-go. As such, we will be working with our carrier partners to deliver BlackBerry 10 to these power users in a variety of ways – based on carrier preference - through the channel, in-store or online,” the company said.

This statement is basically in response to the fact that T-Mobile has decided to no longer stock BlackBerry 10 devices in its stores. T-Mobile referred to BlackBerry’s business customers when it told Reuters about dropping the line from its Stores.

 “T-Mobile continues to support the Blackberry platform. Customers can buy BlackBerry Z10 and Q10 devices in T-Mobile retail stores, online at www.T-Mobile.com and through B2B sales channels. The T-Mobile retail channel is moving toward fulfillment via direct ship for Blackberry devices, rather than in-store inventory. A customer will still see a phone on the shelf. If inventory is not available in the store, the device can be ordered,” a T-Mobile statement stated.

The feeling is that since most BlackBerry customers are large corporations, a quantity of devices will be ordered by a company, not an individual walking into a T-Mobile store. Of course, this means that customers will still be able to order the devices, though simply through different channels.




Edited by Blaise McNamee


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