Analysts react to proposed BlackBerry sale


“The beginning of the end for BlackBerry” – Industry analysts offer their views on BlackBerry’s proposed $4.7 billion (£3 billion) sales to Fairfax Financial Holdings Limited

“We’re likely seeing the beginning of the end for one of the most iconic brands in mobile technology,” was the view from Ovum chief telecoms analyst Jan Dawson this evening (September 23).

Dawson believes BlackBerry will never be able to reclaim past successes, regardless of owner, and predicts the manufacturer will exit the hardware (handset) market by next year.

“Taking BlackBerry private doesn’t solve the fundamental problems at the company. First, the company’s device sales are cratering, and its announcement last week that it no longer intends to pursue the consumer market is essentially the death knell for this business.

“BlackBerry’s supply chain relies on scale for profitability, and it will never again be able to achieve the scale necessary to make money on devices. It’s likely that BlackBerry will be out of the device business entirely by the middle of next year.

“The next challenge is that BlackBerry’s other businesses are all to a greater or lesser extent dependent on its devices business. BlackBerry Messenger’s installed base is entirely on BlackBerry devices, and its launch on iOS and Android was aborted over the weekend.

“Normally, companies are taken private in order to give a long-term strategy time to payoff without the hassles of short-term investor scrutiny. But BlackBerry’s key problem for the last couple of years has been the lack of such a long-term strategy. It simply hasn’t articulated a way to rebuild its business as its device sales drop precipitously. Unless Fairfax plans to radically change or accelerate BlackBerry’s strategy, it’s unlikely to be able to turn the company around.

“We’re likely seeing the beginning of the end for one of the most iconic brands in mobile technology.”

Tough Decisions

CCS Insight chief of research Ben Wood described the proposed $4.7 billion sale of BlackBerry as a “new chapter” for the manufacturer, but questions over its future remain.

Wood also expects more bids to arrive over the next six weeks.

“At this stage further bids on BlackBerry’s assets cannot be ruled out, but this certainly marks a new chapter in the destiny of the company whether this bid is accepted or a rival offer materializes.”

“Private ownership will provide breathing space as strategic options are assessed. Early indications suggest a focus on the business market. Wider structural changes such as spinning off BlackBerry Messenger (BBM) and retrenching from hardware will likely be carefully reviewed.”

“The profit warning on Friday was a clear indication of the extreme difficulties BlackBerry faces in the hyper-competitive mobile devices business. This latest bid underlines the seriousness of the company’s situation. By going private, the structure and purpose of the company can be redefined behind closed doors.”

“Irrespective of this bid, questions around BlackBerry’s future remain unchanged. It seems unlikely it can continue as it is and while the most attractive option is to focus on business users, tough decisions will need to be made about which parts of the business to persevere with and which pieces to spin off or abandon.”