When Will Blackberry's Death Spiral End?

It’s no big surprise. BlackBerry couldn't find a buyer. The company is trying to raise up to $1 billion in debt financing in a move that is diluting shareholder value even more.   New CEO John Chen may have a shot at stabilizing the company, but it will be a holding move at best until the right buyer comes up with the right offer.

Two months ago, BlackBerry more-or-less officially put itself on the market.   Its largest shareholder, Fairfax Financial Holdings, was the only one to make a serious offer for the company, valuing it at $4.7 billion to take it private, but it couldn't raise the money to complete the sale.   Facebook, Lenovo, and private equity firm Cerberus were among the companies kicking the tires.

After announcing this week that it couldn't find a buyer, BlackBerry's stock price took a dive from around $8 a share to around $6.50. Some financial analysts now believe the actual price per share may be anywhere from $2 to $4. About the only good news out of this week’s financial moves is Qatar Holding putting in about $200 million. Middle Eastern investment money often gives a slight media buzz boost to BlackBerry. 

Fairfax, Qatar Holdings and others participating in the bond offering know it is high risk. The debt pays 6 percent interest and converts into BlackBerry shares after seven years if the price per share is at $10, otherwise investors get nothing, according to reports.   If the company does go under, the bond holders are among the first in line to get paid.

I'm not sure if BlackBerry can survive for the next twenty four to thirty six months. The business world is shifting to Android devices, including smartphones and tablets.   BlackBerry blew its entry into the tablet world and smartphone sales continue to decline.   However, BlackBerry continues to have value in its patent portfolio and still has a strong enterprise services presence with some cash coming in.

Interim CEO Chen said there won't be any hasty moves to move to Android, which is interesting because the clock is ticking in terms of enterprises already in the process of migrating to the OS from BlackBerry.   BlackBerry may end up with the right answer, but spending too much time figuring out what the company should be may not leave enough potential customers intact to buy into the new vision. As evidenced by Palm and a trail of other failed companies over the years, once a customer base has lost faith and moved on to something else, it's hard to bring them back.